Linear, north–south trending Peddavura greenstone belt occurs in easternmost part of the Dharwar Craton. It consists of pillowed basalts, basaltic andesites, andesites (BBA) and rhyolites interlayered with ferruginous chert that were formed under submarine condition. Rhyolites were divided into type-I and II based on their REE abundances and HREE fractionation. Rb–Sr and Sm–Nd isotope studies were carried out on the rock types to understand the evolution of the Dharwar Craton. Due to source heterogeneity Sm–Nd isotope system has not yielded any precise age. Rb–Sr whole-rock isochron age of 2551 ± 19 (MSWD = 1.16) Ma for BBA group could represent time of seafloor metamorphism after the formation of basaltic rocks. Magmas representing BBA group of samples do not show evidence for crustal contamination while magmas representing type-II rhyolites had undergone variable extents of assimilation of Mesoarchean continental crust (>3.3 Ga) as evident from their initial ε Nd isotope values. Trace element and Nd isotope characteristics of type I rhyolites are consistent with model of generation of their magmas by partial melting of mixed sources consisting of basalt and oceanic sediments with continental crustal components. Thus this study shows evidence for presence of Mesoarchean continental crust in Peddavura area in eastern part of Dharwar Craton.