Invasive exotic pathogens pose a threat to trees and forest ecosystems worldwide1, hampering the provision of essential ecosystem services such as carbon sequestration and water purification2. Hybridization is a major evolutionary force that can drive the emergence of pathogens3. Phytophthora ramorum, an emergent pathogen that causes the sudden oak and larch death, spreads as reproductively isolated divergent clonal lineages. Sexual recombination has never been reported in this pathogen under natural conditions and laboratory crosses have yielded unfit progenies, suggesting postzygotic barriers to hybridization. Here we report the discovery in a plant nursery of novel variants of P. ramorum that are the result of homoploid hybridization via sexual recombination between North American and European lineages of the pathogen. We show that these hybrids are viable, can infect plants and produce spores for long-term survival and propagation. Genome sequencing revealed novel genotypic combinations, not present in the parental lineages, at 54,515 single nucleotide polymorphism loci. More than 6000 of the novel genotypes at these loci are predicted to have a functional impact in genes associated with host infection, including effectors, carbohydrate-active enzymes and proteases. We also observed post-meiotic mitotic recombination that could generate additional genotypic and phenotypic variation and contribute to homoploid hybrid speciation. Our study highlights the importance of plant pathogen biosurveillance to detect novel variants and inform management and control.