An internal fruit rot disease of sweet peppers was first detected in Belgium in 2003. Research conducted mostly in Canada indicates that this disease is primarily caused by Fusarium lactis Pirotta. Ninety-eight Fusarium isolates obtained from diseased sweet peppers from Belgium, as well as from other countries (Canada, the Netherlands and the United Kingdom) were identified by sequencing the translation elongation factor 1a (EF). Of these 98 isolates, 13 were identified as F. oxysporum Schltdl., nine as F. proliferatum (Matsush.) Nirenberg and two belonged to clade 3 of the F. solani species complex. Of the 74 remaining isolates, the EF sequence showed 97% to 98% similarity to F. lactis. Of these isolates, the ß-tubulin (TUB), calmodulin (CAM) and the second largest subunit of RNA polymerase II (RPB2) genes were also sequenced. Analysis of the combined sequences revealed that the 74 isolates share nine combined sequences that correspond to nine multilocus sequence types (STs), while the F. lactis neotype strain and one other strain, both isolated from figs, form a separate ST. Together, these 10 STs represent a monophyletic F. lactis species complex (FLASC). An unusually high level of genetic diversity was observed between (groups of) these STs. Two of them (ST5 and ST6) fulfilled the criteria for species recognition based on genealogical exclusivity and together represent a new monophyletic species lineage (FLASC-1). The seven other STs, together with the F. lactis neotype ST, form a paraphyletic species lineage in the African clade of the Gibberella fujikuroi species complex (GFSC). From each of the 10 STs, the mycotoxin production was assessed using a multi-mycotoxin liquid chromatography mass spectrometry method. Out of the 27 analyzed mycotoxins, beauvericin and fumonisins were detected in sweet pepper tissue and in maize kernels. The 10 STs clearly differed in the amount of mycotoxin produced, but there was only limited congruence between the production profile and the phylogenetic analysis. Furthermore, the morphological characterization (based on mycelial growth rate and the length of macroconidia) showed distinct differences between the 10 STs, but again there was limited congruence with the phylogenetic results. In conclusion, the data presented in this study demonstrate that 75% of the isolates obtained from sweet pepper with internal fruit rot belong to a F. lactis species complex (FLASC), including a new FLASC-1 monophyletic species, and that the members of this complex display great genetic and phenotypic diversity.