This study focused on an endophytic bacterial strain, Pantoea sp. Sd‐1, which can be used to degrade lignin and rice straw. This strain was isolated from rice seeds by an optimized surface sterilization method. Pantoea sp. Sd‐1 showed exceptional ability to degrade rice straw and lignin. In rice straw or kraft lignin‐containing medium supplemented with 1% glucose and 0·5% peptone, Pantoea sp. Sd‐1 effectively reduced the rice straw mass weight by 54·5% after 6 days of treatment. The strain was also capable of reducing the lignin colour (52·4%) and content (69·1%) after 4 days of incubation. The findings suggested that the rice endophytic bacterium Pantoea sp. Sd‐1 could be applied for the degradation of lignocellulose biomass, such as rice straw. SIGNIFICANCE AND IMPACT OF THE STUDY: Rice straw, an abundant agricultural by‐product in China, is very difficult to degrade because of its high lignin content. Due to the immense environmental adaptability and biochemical versatility of bacteria, endophytic bacteria are useful resources for biodegradation. In this study, we screened for endophytic bacteria capable of biodegrading rice straw and lignin and obtained one strain, Pantoea sp. Sd‐1, with suitable characteristics. Sd‐1 could be used for degradation of rice straw and lignin, and may play an important role in biodegradation of this agricultural by‐product.