Diaporthe phaseolorum var. sojae is a pathogen of upper stems, pods, and seed of soybean [Glycine max (L.) Merr.], with a documented latent infection period. This study investigates D. phaseolorum var. sojae as a pathogen of basal stems and taproots. The objective of this research was to determine the effect of crop rotation and tillage system on the incidence of plants infected by D. phaseolorum var. sojae and subsequent effect on seed yield. Diaporthe phaseolorum var. sojae was isolated from soybean plants at three growth stages (V1, R1, and R8) from basal and subterranean portions of the soybean stem. Small differences in disease incidence were observed between rotation sequences and tillage systems in 2000. Averaged across tillage systems and rotation sequences in 2001, the incidence of D. phaseolorum var. sojae was greater in no‐tillage systems and in rotation sequences with continuous planted soybean. When averaged across rotation sequences, tillage systems, and years at R1, the incidence of plants infected by D. phaseolorum var. sojae explained 71% of the variation observed for seed yield. It was concluded that D. phaseolorum var. sojae is a pathogen of subterranean basal stems and causes seed yield loss in soybean.