Pseudomonas aeruginosa is one of the important opportunistic pathogens causing life threatening nosocomial infections. Both clinical and environmental isolates can be considered potential pathogens due to the conservation of some of the virulence genes. Present study aimed at evaluating the prevalence and diversity of some of the virulence genes among P. aeruginosa isolates from clinical and environmental samples.  In this study, 70 clinical (sputum and swab) and 31 environmental isolates were checked for the presence of 8 different virulence genes by PCR amplification. Genetic diversity was studied by performing Enterobacterial repetitive intergenic consensus (ERIC) PCR followed by cluster analysis using GelCompar II software. There was a significant difference in the number of clinical and environmental isolates possessing virulence genes (t = 8.2, c² = 28.257 at p £ 0.05). 10 clinical and 1 environmental isolate was found to possess all four genes of the type III secretion system (exoS, exoU, exoT and exoY).  Cluster analysis revealed 3 major groups with some of the environmental isolates clustering with the clinical ones. To the best of our knowledge, this is the first study to report the presence of all four genes involved in type III secretion system in P. aeruginosa. Presence of several virulence traits in the environmental isolates suggests the possibility of these non clinical ones becoming a clinical pathogenic one. The similarity of three environmental isolates with the clinical ones shows the likelihood of infection caused by them in a hospital setting.