Aims Ratoon stunting disease caused by Leifsonia xyli subsp. xyli (Lxx) is a bacterial disease that has plagued sugarcane-planting countries for a long time. This study mainly analysed Lxx localization and its effects on sugarcane leaf. Methods and Results Badila were inocultated by bacteria of Lxx. It was noted that the number of Lxx cells were rapidly enriched in sugarcane leaves from the 150th to the 210th days of post inoculation (dpi). Lxx infection disrupted the integrity of vascular bundle sheath cells (BSC) in the 'Kranz anatomy' of leaves, resulting in irregular accumulation of starch in vascular BSC of leaves. In situ PCR showed that the Lxx localized in the xylem vessels, mesophyll cell (MC) and BSC as described before in sugarcane leaf, a new niche within the host tissues in the phloem of sugarcane stem. The gene expression and activities of phosphoenolpyruvate carboxylase (PEPC), pyruvate, orthophosphate dikinase (PPDK) and NADP-malic enzyme (NADP-ME) enzymes were lower in Lxx-inoculated sugarcane plants as compared to the MI group. Conclusion Lxx infection not only disrupted the structure of vascular BSC in the C4 'Kranz anatomy' of sugarcane leaves, but also affected the activities and gene expression of the key enzymes PEPC, PPDK and NADP-ME in the C4 cycle of sugarcane suggesting a reduction in CO2 fixation. Significance and Impact of the Study The effect of Leifsonia xyli subsp. xyli (Lxx) infection on the photosynthetic physiology of sugarcane is currently limited to the evaluation of photosynthetic parameters. This study assessed the impact of Lxx infection on the mechanism of C4 cycle CO2 fixation and to accompanying plant anatomy.