We report here tagging and fine-mapping of gm3 gene, development of a functional marker for it and its use in marker-assisted selection. The recessive rice gall midge resistance gene, gm3 identified in the rice breeding line RP2068-18-3-5 confers resistance against five of the seven Indian biotypes of the Asian rice gall midge Orseolia oryzae. We report here tagging and fine-mapping of gm3 gene, development of a functional marker for it and demonstrated its use in marker-assisted selection (MAS). A mapping population consisting of 302 F10 recombinant inbred lines derived from the cross TN1 (susceptible)/RP2068-18-3-5, was screened against gall midge biotype 4 (GMB4) and analyzed with a set of 89 polymorphic SSR markers distributed uniformly across the rice genome. Two SSR markers, RM17480 and gm3SSR4, located on chromosome 4L displayed high degree of co-segregation with the trait phenotype and flanked the gene. In silico analysis of the genomic region spanning these two markers contained 62 putatively expressed genes, including a gene encoding an NB-ARC (NBS-LRR) domain containing protein. A fragment of this gene was amplified with the designed marker, NBcloning 0.9 Kb from the two susceptible TN1, Improved Samba Mahsuri (B95-1) and two resistant cultivars, RP 2068-18-3-5 and Phalguna (with Gm2 gene). The amplicons were observed to be polymorphic between the susceptible and resistant genotypes and hence were cloned and sequenced. A new primer, gm3del3, which was designed based on sequence polymorphism, amplified fragments with distinct size polymorphism among RP2068-18-3-5, Phalguna and TN1 and B95-1 and displayed no recombination in the entire mapping population. Expression of the candidate NB-ARC gene in the susceptible TN1 and the resistant RP2068-18-3-5 plants following infestation with GMB4 was analyzed, through real-time reverse transcription PCR. Results showed twofold enhanced expression in RP2068-18-3-5 plants, but not in TN1 plants, 120 h after infestation. Amino acid sequence and structure analysis of the proteins coded by different alleles of gm3 gene showed deletion of eight amino acids due to an early stop codon in RP2068-18-3-5 resulting in a change in the functional domain of the protein. The gm3del3 was used as a functional marker for introgression of gm3 gene into the genetic background of the elite bacterial blight resistant cultivar Improved Samba Mahsuri (B95-1) through MAS.