To determine the genetic diversity and physiological races of the rice blast fungus from Hani terrace of Yuanyang county (Yunnan province), simple sequence repeat (SSR) markers were used to estimate the genetic diversity of isolates of Magnaporthe grisea. Sixty-two isolates were studied for physiological races by using the standard differential variety sets developed in Japan for blast resistance in rice. Genetic diversity of rice blast fungus was analyzed with the unweighted pair-groups method using arithmetic averages (UPGMA) method of cluster analysis. Two-hundred isolates were divided into 16 physiological races, 000, 002 and 006 among them were found to be dominant races. The overall genetic diversity of rice blast fungus from Hani terrace of Yuanyang county observed in this study was relatively high (He = 0.57 ± 0.27, I = 1.17 ± 0.60). All isolates were classified into 9 genetic lineages at 0.20 linkage distance level. It was also noticed that genetic diversity of rice blast fungus also varied with altitude. There were 9 races between 1,600 m and 1,700 m in altitude and highly genetic diversity of rice blast fungus populations was observed at the range of 1,400 to 1,500 m (He = 0.57 ± 0.24). The data strongly suggested that there are significant positive correlations between genetic varieties of rice blast fungus and the traditional rice varieties cultivated over decades in Yuanyang Hani terrace.