Exopolysaccharide (EPS) of Myxococcus xanthus is a well-regulated cell surface component. In addition to its known functions for social motility and fruiting body formation on solid surfaces, EPS has also been proposed to play a role in multi-cellular clumping in liquid medium, though this phenomenon has not been well studied. In this report, we confirmed that M. xanthus clumps formed in liquid were correlated with EPS levels and demonstrated that the EPS encased cell clumps exhibited biofilm-like structures. The clumps protected the cells at physiologically relevant EPS concentrations, while cells lacking EPS exhibited significant reduction in long-term viability and resistance to stressful conditions. However, excess EPS production was counter-productive to vegetative growth and viable cell recovery declined in extended late stationary phase as cells became trapped in the matrix of clumps. Therefore, optimal EPS production by M. xanthus is important for normal physiological functions in liquid.