Mutants of Rhizoctonia solani were developed using UV irradiation of the mycelia of isolate RS7, which is the field isolate causing sheath blight in rice. The mutants showed reduced virulence, as compared to RS7 in detached leaf sheath and intact rice plants. All the mutants produced some toxin but in varied quantities. The amount of toxin produced by the mutants was positively correlated with disease development on rice plants and detached leaf sheaths. The wild isolate RS7 and mutant RSU7 produced more quantity of toxic material, which in turn related to severe sheath blight symptoms. Sclerotial production on the infected rice sheath also showed significant variation among the mutants and the virulent and less virulent isolates. SDS-PAGE analysis of the mycelial proteins showed many proteins of different molecular weights varying among mutants and wild isolate at different stages of mycelial growth. Correlation between reduction in toxin production and disease severity is statistically significant.