To isolate and identify endophytic nitrogen-fixing bacteria in sugarcane growing in Cuba without chemical fertilizers. Two N2-fixing isolates, 9C and T2, were obtained from surface-sterilized stems and roots, respectively, of sugarcane variety ML3-18. Both isolates showed acetylene reduction and H2 production in nitrogen-free media. Nitrogenase activity measured by H2 production was about 15 times higher for isolate 9C than for T2 or for Gluconoacetobacter diazotrophicus (PAL-5 standard strain, ATCC 49037). The nifH gene segment was amplified from both isolates using specific primers. Classification of both T2 and 9C was made on the basis of morphological, biochemical, PCR tests and 16S rDNA sequence analysis. Isolate 9C was identified as a Pantoea species from its 16S rDNA, but showed considerable differences in physiological properties from previously reported species of this genus. For example, 9C can be cultured over a wide range of temperature, pH and salt concentration, and showed high H2 production (up to 67.7 nmol H2 h(-1) 10(10) cell(-1)). Isolate T2 was a strain of Gluconacetobacter diazotrophicus. A new N2-fixing endophyte, i.e. Pantoea, able to produce H2 and to grow in a wide range of conditions, was isolated from sugarcane stem tissue and characterized. The strain with these attributes may well be valuable for agriculture.