Newcastle disease virus (NDV) causes severe and economically important disease in poultry around the globe. None of NDV strains in Pakistan have been completely characterized and the role of rural poultry in harbouring NDV is unclear. Since they have a very important role for long-term circulation of the virus, samples were collected from apparently healthy backyard poultry (BYP) flocks. These samples were biologically analyzed using mean death time (MDT) and intracerebral pathogenicity index (ICPI), whereas genotypically characterized by the real-time PCRs coupled with sequencing of the complete genome. Despite of being non-pathogenic for BYP, the isolate exhibited MDT of 49.6 h in embryonated chicken eggs and an ICPI value of 1.5. The F gene based real-time PCR was positive, whereas M-gene based was negative due to substantial changes in the probe-binding site. The entire genome of the isolate was found to be 15192 nucleotides long and encodes for six genes with an order of 3'-NP-P-M-F-HN-L-5'. The F protein cleavage site, an indicative of pathogenicity, was 112RRQKRF117. Complete genome comparison indicated that the RNA dependent RNA polymerase gene was the most and the phosphoprotein was least conserved gene, among all the genes. The isolate showed an Y526Q substitution in the HN protein, which determines neuraminidase receptor binding and fusion activity of NDV. Phylogenetic analysis, based on F and HN genes, classified this isolate into genotype VII, a predominant genotype responsible for ND outbreaks in Asian countries. However, it clustered well apart from other isolates in this genotype to be considered a new subgenotype (VII-f). These results revealed that this isolate was similar to virulent strains of NDV and was avirulent in BYP either due to resistance of local breeds or due to other factors such as substantial mutations in the HN protein. Furthermore, we have characterized the first isolate of NDV, which could act as domestic reference strain and could help in development and selection of appropriate strain of NDV for vaccine in the country.