In the present study, the partial gene sequences of P32 protein, an immunogenic envelope protein of Capripoxviruses (CaPV), were analyzed to assess the genetic relationship among sheeppox and goatpox virus isolates, and restriction enzyme specific PCR-RFLP was developed to differentiate CaPV strains. A total of six goatpox virus (GTPV) and nine sheeppox virus (SPPV) isolates of Indian origin were included in the sequence analysis of the attachment gene. The sequence analysis revealed a high degree of sequence identity among all the Indian SPPV and GTPV isolates at both nucleotide and amino acid levels. Phylogenetic analysis showed three distinct clusters of SPPV, GTPV and Lumpy skin disease virus (LSDV) isolates. Further, multiple sequence alignment revealed a unique change at G120A in all GTPV isolates resulting in the formation of Dra I restriction site in lieu of EcoR I, which is present in SPPV isolates studied. This change was unique and exploited to develop restriction enzyme specific PCR-RFLP for detection and differentiation of SPPV and GTPV strains. The optimized PCR-RFLP was validated using a total of fourteen (n=14) cell culture isolates and twenty two (n=22) known clinical samples of CaPV. The Restriction Enzyme specific PCR-RFLP to differentiate both species will allow a rapid differential diagnosis during CaPV outbreaks particularly in mixed flocks of sheep and goats and could be an adjunct/supportive tool for complete gene or virus genome sequencing methods.