The rice blast fungus Magnaporthe oryzae secretes a battery of effector proteins during host infection to suppress plant immunity and promote disease. Among these effectors, the MAX effector-Pwl2 was first identified as a host specificity determinant for infection of weeping lovegrass (Eragrostis curvula). However, its biological activity has remained unknown. Here we show that the PWL2 gene is ubiquitous in all host-limited forms of M. oryzae and has undergone substantial copy number expansion indicating that it is a core effector of the blast fungus. We used CRISPR/Cas9-mediated gene editing to delete all three copies of PWL2 and generate a pwl2 null mutant in M. oryzae strain Guy11. This resulted in gain-of-virulence towards weeping lovegrass, but a reduction in the severity of disease symptoms on rice. To further investigate the virulence mechanism of Pwl2, we showed that transgenic rice and barley lines constitutively expressing PWL2 display suppression of reactive oxygen species generation and increased susceptibility to infection by M. oryzae. Also, we identify the barley and rice heavy metal-binding isoprenylated protein HIPP43 as a target of the Pwl2 effector. Transgenic lines overexpressing HIPP43 exhibit attenuated defense responses and increased susceptibility to blast infection, consistent with the hypothesis that Pwl2 binds HIPP43 to modulate immunity. This binding is coupled to changes in cellular localisation of these proteins. Taken together, our results provide evidence that Pwl2 is a virulence factor in M. oryzae that acts by suppressing host immunity through binding and re-localising HIPP43.