Wheat (Triticum aestivum) is one of the most important staple crops. The necrotrophic binucleate fungus Rhizoctonia cerealis is the causal agent for the devastating disease wheat sharp eyespot and additional diseases of other agricultural crops and bioenergy plants. In this study, we present the first high-quality genome assembly of R. cerealis Rc207, a highly aggressive strain isolated from wheat. The genome encodes expand and diverse sets of virulence-related proteins, especially secreted effectors, carbohydrate-active enzymes (CAZymes), metalloproteases, Cytochrome P450 (CYP450), and secondary metabolite-associated enzymes. Many of these genes, in particular those encoding secretory proteins and CYP450, showed markedly up-regulation during infection in wheat. Of 831 candidate secretory effectors, ten up-regulated secretory proteins, such as CAZymes, metalloproteases and antigens, were functionally validated as virulence factors required for the fungal infection in wheat. Further intra-species and inter-species comparative genomics analyses showed that repeat sequences, accounting for 17.87% of the genome, are the major driving force for the genome evolution, and frequently intraspecific gene duplication contributes to expansion of pathogenicity-related gene families. This is the first genome-scale investigation elucidating the pathogenesis mechanisms and evolutionary landscape of R. cerealis. Our results provide essential tools for further development of effective disease control strategies.