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This paper addresses the need of semantic component in the grid environment to discover and describe the grid resources semantically. We propose semantic grid architecture by introducing a knowledge layer at the top of Gridbus broker architecture and thereby enabling broker to discover resources semantically. The semantic component in the knowledge layer enables semantic description of grid resources with the help of ontology template. The ontology template has been created using Protege-OWL editor for different types of computing resources in the grid environment. The Globus Toolkit's MDS is used to gather grid resource information and Protege-OWL libraries are used to dynamically create knowledge base of grid resources. Algernon inference engine is used for interacting with the knowledge base to discover suitable resources.