A freshwater algicidal bacterial strain, Lzh-5, isolated from Lake Taihu, with strong algicidal activity against Microcystis aeruginosa, was identified as Bacillus sp. based on its phenotypic characteristics and 16S ribosomal RNA (rRNA) gene sequence. The algicidal mode of Bacillus sp. Lzh-5 was indirect, attacking M. aeruginosa cells by releasing algicidal compounds. Two algicidal compounds (S-5A and S-5B) produced by Bacillus sp. Lzh-5 were purified with ethyl acetate extraction, column chromatography, and high-performance liquid chromatography and identified as hexahydropyrrolo[1,2-a]pyrazine-1,4-dione and 3-isopropyl-hexahydropyrrolo[1,2-a]pyrazine-1,4-dione based on liquid chromatography-mass spectrometry, gas chromatography-mass spectrometry, and nuclear magnetic resonance analyses. The active algicidal compounds S-5A (hexahydropyrrolo[1,2-a]pyrazine-1,4-dione) and S-5B (3-isopropyl-hexahydropyrrolo[1,2-a]pyrazine-1,4-dione) displayed high levels of algicidal activity against M. aeruginosa 9110, with LD50 values of 5.7 and 19.4 mu g/ml, respectively. This is the first report of 3-isopropyl-hexahydropyrrolo[1,2-a]pyrazine-1,4-dione as an algicidal compound. Compounds S-5A and S-5B also induced obvious morphological changes in M. aeruginosa 9110. In cocultures of M. aeruginosa 9110 and Bacillus sp. Lzh-5, the cell density of Bacillus sp. Lzh-5 and the concentrations of S-5A and S-5B correlated positively with the algicidal activity. Our results indicate that strain Lzh-5 and its two algicidal compounds are potentially useful for controlling cyanobacterial blooms in Lake Taihu.