The biocontrol agent, Serratia plymuthica A21-4, has been developed for controlling pepper Phytophthora blight. Serratia plymuthica A21-4 strongly inhibits the mycelial growth, zoospore formation, and cyst germination of Phytophthora capsici in vitro. The application of a cell suspension of strain A21-4 to pepper plants in pot experiments and in greenhouse successfully controlled the disease. The bacteria produced a potent antifungal substance which was a key factor in the suppression of Phytophthora capsici. The most active chemical compound was isolated and purified by antifungal activityguided fractionation. The chemical structure was identified as a chlorinated macrolide (C23H31O8Cl) by spectroscopic (UV, IR, MS, and NMR) data, and was named macrocyclic lactone A21-4. The active compound significantly inhibited the formation of zoosporangia and zoospore and germination of cyst of P. capsici at concentrations lower than 0.0625 μg/ml. The effective concentrations of the macrocyclic lactone A21- 4 for ED50 of mycelial growth inhibition were 0.25 μg/ ml, 0.25 μg/ml, 0.30 μg/ml and 0.75 μg/ml against P. capsici, Pythium ultimum, Sclerotinia sclerotiorum and Botrytis cinerea, respectively.