Bacillus subtilis CL27 and B. pumilus CL45 showed similar activity against Botrytis cinerea in in vitro plate assays. In a seedling bioassay, however, B. subtilis CL27 had activity similar to a commercial fungicide while B. pumilus CL45 failed completely to prevent seedling damping-off caused by Bot. cinerea. Antibiotic production by the two Bacillus strains was found to depend on the growth substrate and highest antibiotic production was found on media based on homogenized cabbage tissue. Antibiotic activity was found to depend on the pH and nutrient concentration in the assay medium. Antifungal antibiotics produced by B. subtilis CL27 and B. pumilus CL45 in different fermentation media were separated by thin layer chromatography. As suspected from the activity spectrum, three antibiotics (one with activity against Alternaria brassicicola, one with activity against Botrytis cinerea and one with activity against both fungi) could be detected in the fermentation broth of CL27, but only one in the fermentation broth of CL45. The two antibiotics produced by strain CL27 with activity against A. brassicicola were identified as peptides since their bands on the TLC plates developed a green to blue/green colour after treatment with 4,4'-tetramethyldiamino-diphenylmethane (TDM) reagent. The third antibiotics produced by strain CL27 and antibiotic produced by CL45 had a similar Rf-value and appeared not to be peptides based on the reaction with TDM. However, they showed a slightly different activity spectrum when tested against a range of different fungi. Antibiotic production was clearly indicated as the mode of action of in vivo biocontrol by strain CL27 against damping off caused by Bot. cinerea of Astilbe micro-plants, because a u.v.-induced antibiotic negative mutant strain CL27b showed no activity in seedling bioassays in vivo. Also the mutant strain CL27a which produced the two peptide antibiotics but had lost the ability to produce the non-peptide antibiotic, showed greatly reduced in vivo activity.