Sclerotinia sclerotiorum fruiting bodies (sclerotia) were found to harbour bacteria that possess anti-fungal activity. Among 1,140 bacterial isolates collected, 32 were found to inhibit the growth of four common fungal pathogens of canola, S. sclerotiorum, Rhizoctonia solani, Alternaria brassicae and Leptosphaeria maculans. One of these broad-spectrum isolates, LEV-006, was found to be closely related to Bacillus subtilis based on 16S rRNA analysis. The anti-fungal activities were purified and found to be associated with a low molecular weight peptide complex consisting mostly of the cyclic lipopeptide fengycin A and B, as revealed by matrix-assisted laser desorption/ionization time-of-flight and post-source decay analysis, as well as two proteins of 20 and 55 kDa. Peptide mass fingerprinting revealed that the 55-kDa protein was similar to vegetative catalase 1; however, when the enzyme was expressed in Escherichia coli, it exhibited catalase but not anti-fungal activity. The sequences of several peptides from the 20-kDa protein were obtained and indicated that it was a unique anti-fungal protein.