Despite the fact bluegrass is rooted deeply in blues, you'll need to approach bluegrass with a different playing style than blues. Here's how to master that genre on the harmonica and how to fit in with bluegrass musicians.
Start practicing rhythm with recordings. Do not approach bluegrass rhythm the same way you do blues, despite the fact bluegrass is heavily based in African-American blues Bill Monroe heard when he was a boy. To find out what key a song is in, play No. 2 draw during the I and IV chords, which make up the beginning bars in a verse. On a C harmonica (played 2nd position in the G key), this two-draw note is G, which is a note of both the I (G) chord and IV (C) chord. When you find a harmonica with a two draw that sounds good in both chords, you have your key. For people used to playing blues harmonica, Monroe's "Bluegrass Special," "Sitting on Top of the World," "Rocky Road Blues," "Heavy Traffic Ahead" and many others will be a good starting point. They are all standard blues progressions.
Adapt from blues. In blues, the harmonica is often wailing along through the song with slow, mournful notes. If you make no modifications to your blues style, you might hear some grumbling from other bluegrass pickers.
Bluegrass solos can be as hot and wild as any rock 'n' roll solo; it's just done on acoustic instruments. You can apply most of your blues soloing experience to bluegrass. The major difference is rhythm. Listen to as much bluegrass as you can, especially early Bill Monroe. Pick an instrument and listen to what it does during the song, then listen to what another instrument is doing in that same song. In a traditional bluegrass band, the fiddle is the only instrument that can sustain a note for numerous beats. The harmonica can also do this, so pay close attention to what the fiddles are doing. Try to emulate what these other instruments are doing, especially with rhythm. You will draw on what several instruments contribute to create your own style. You might, for example, base your bluegrass-rhythm style largely on Bill Monroe's mandolin, whose primary contribution in rhythm is a strong accent on the two and four beats, known as the chop chord. Jerome Godboo of Brokenjoe, another top bluegrass player, apparently has drawn his inspiration from melodic-style banjo.
Learn how to identify guitar chords. You can back any song without having heard it before simply by watching the guitar player. When he switches from G to D, for instance, so do you. You can also watch the mandolin, but it is easier to identify chord formations on the guitar.
Learn your chords, just like you would on a guitar or any other instrument. Bluegrass players tend to play and think in the key of G, which I've actually heard called the key of "Geee Haaaw!" If they play in A, the guitar players capo on the second fret. Mandolin players simply move their G chord formation up two steps. Learn the chords for a C harmonica in second position G. When you play in A, think of it as moving a capo up two frets; you play the same way in each key. In the key of G, the main chords will be G, C, D and G7. You'll also see Em a lot. The G chord is 2, 3, and 4 draw. The C chord is any three blow notes on the harmonica, but you will typically play it 2, 3 and 4 blow.
Learn other chords. A regular-tuned diatonic harmonica cannot play a true D chord, but you have viable options. You can play 4, 5 and 6 draw for a D minor. Since, in the key of G, the D is the five chord and has the most tension of the progression, the D minor will work and can add to that tension. Try playing a tongue-block octave of the 1 and 4 draw for the D chord. Put your mouth over holes 1 through 4, cover holes 2 and 3 with your tongue and draw. The G7 is most often used to transition from the G chord to the C chord and doesn't last for more than a measure. You have two options here: You can bend the two draw down from a G to an F to hit the seventh note, or play the G7 octave with a tongue-block octave on the 2 and 5 draw notes. You can't play a complete Em chord, which has the notes E, G and B, but you can play the 2 blow and 3 blow together for the E and G. Mandolin players play two-note "chords" all the time. It's called a double stop. If you want, you could also play the notes one at a time, 2 blow for the E, 2 draw or 3 blow for the G, then 3 draw for the B. If a chord comes up that throws you -- and it will -- playing the root note (the note the chord is named for) will work.
Solo your heart out.
The bluegrass solo is as wild and hot as you want it to be. Don't hold back -- nobody else is. Much of the beauty of bluegrass lies in the unrestrained solo. Typically, you rarely solo on the chorus progression. It's nearly always the verse, and you get one verse. At the end of your verse, it's someone else's turn. Listen to the transition between solos on recordings; pickers usually play a "tag" at the end of their solo, a short, musical statement that ends the solo on the root note of the I chord. The "shave and a haircut, two bits" ditty is an example of a tag, only shave and a haircut is a universal signal to end the piece.
Know when to solo and when to not.
Bluegrass is a fast, hard-hitting style of music, but orchestration is full of nuance. Even in a jam situation, there is a leader -- it's usually the singer. When he gives you a nod, or it might even be just a glance, let it rip. If there are no nods in your jam, you just have to jump in. If you and someone else start a solo at the same time, back off. It's common courtesy. When the next solo comes around, everyone will know it is your turn. Bluegrass pickers keep track of these things. Everybody gets a solo. If everybody is rip-roaring on a tune, the solos might go on for 20 minutes. Jams have been known to last 20 hours.
Know where to play. Bluegrass musicians are everywhere. Find a bluegrass festival and bring your harps. While there may be players on the stage, the real music is in the campsites. Those jams last for days, and all you have to do is show up.
Learn some fiddle tunes.
Memorize them, or learn them on the spot. Anywhere you find bluegrass pickers, you'll find some fiddle tunes. Glen Weiser has an excellent book of fiddle tunes for harmonica.
Forget the sterotypes. You may actually hear grumbling from some closed-minded pickers about there being no harmonica in bluegrass. Forget these guys. Should you ever need to make an argument, tell them about Curly Bradshaw, a member of Bill Monroe and the Bluegrass Boys during World War II. Bradshaw played harmonica full time. Unfortunately, Bradshaw's harmonica never appears on any of Monroe's recordings, so that sound is lost to posterity. While Bradshaw is the only harmonica player to be an official Bluegrass Boy, Monroe played with harmonica players on numerous occasions throughout his life. Most bluegrass players are open minded musically, like Monroe.
Keep fairly sober. Bluegrass musicians are typically old-fashioned, respectable people. However, at a campsite jam, there may be whiskey circulating, since no one has to drive home. Be careful of others' instruments. If you put a scratch on someone else's instrument, you might have to pay quite a bit to repair it.