Historically, Xanthomonas species are primarily known for their pathogenicity against plants, but recently, there have been more findings of non-pathogenic xanthomonads. In the present study, we report isolates from healthy rice seeds that belong to a new species, X. protegens, a protector of the rice plants against a serious pathogenic counterpart, i.e. X. oryzae pv. oryzae upon leaf clip co-inoculation. The new member species is non-pathogenic to rice and lacks a type III secretion system. The pangenome investigation revealed a large number of unique genes, including a novel lipopolysaccharide biosynthetic gene cluster, that might be important in its adaptation. The phylo-taxonogenomic analysis revealed that X. protegens is a taxonomic outlier species of X. sontii, a core, vertically transmitted rice seed endophyte with numerous probiotic properties. Interestingly, X. sontii is also reported as a keystone species of healthy rice seed microbiome. The findings and resources will help in the development of unique gene markers and evolutionary studies of X. sontii as a successful symbiont and X. oryzae as a serious pathogen. Here, we propose X. protegens sp. nov. as a novel species of the genus Xanthomonas with PPL118=MTCC 13396=CFBP 9164=ICMP 25181 as the type strain. PPL117, PPL124, PPL125 and PPL126 are other strains of the species.