A study of the diversity of endophytic bacteria present in seeds of a deepwater rice variety revealed the presence of seven types of BOX-PCR fingerprints. In order to evaluate the plant growth promoting potential the presence of nitrogenase, indole acetic acid production and mineral phosphate solubilization were estimated in the representative BOX-PCR types. The seven representatives of BOX-PCR types produced indole acetic acid, reduced acetylene and showed specific immunological cross-reaction with anti-dinitrogenase reductase antibody. Only four types showed mineral phosphate solubilizing ability. Comparison of cellulase and pectinase activities showed differences among different BOX-PCR types. PCR fingerprinting data showed that one strain isolated from the surface sterilized seeds as well as the aerial parts of the seedlings of rice variety showed low cellulase and pectinase but relatively high ARA. On the basis of 16S rDNA nucleotide sequence and BIOLOG system of bacterial identification, this strain was identified as Pantoea agglomerans. For studying the endophytic colonization this strain was genetically tagged with the reporter gene, gusA. Histochemical analysis of the seedling grown in hydroponics showed that the tagged strain colonized the root surface, root hairs, root cap, points of lateral root emergence, root cortex and the stelar region. Treatment of the roots with 2,4-D produced short thickened lateral roots which showed better colonization by P. agglomerans.