Sclerotium oryzae, the cause of stem rot of rice, overwinters as sclerotia either free in the soil or in association with rice residue. When residues were incorporated in soil rather than burned, S. oryzae inoculum levels increased, stem rot severity increased, and yields decreased. Inoculum levels remained nearly constant where residues were burned. Under the conditions of this study, the incorporation of residue did not affect rice yield by altering nutrient availability. It was concluded that burning of residue is beneficial in minimizing severity of stem rot disease in areas where it is a problem, and further, that open-field burning is effective in minimizing the buildup of S. oryzae where it presently occurs at inconsequential levels.