Chemical defense against predators is widespread in natural ecosystems. Occasionally, taxonomically distant organisms share the same defense chemical. Here, we describe an unusual tripartite marine symbiosis, in which an intracellular bacterial symbiont ("Candidatus Endobryopsis kahalalidefaciens") uses a diverse array of biosynthetic enzymes to convert simple substrates into a library of complex molecules (the kahalalides) for chemical defense of the host, the alga Bryopsis sp., against predation. The kahalalides are subsequently hijacked by a third partner, the herbivorous mollusk Elysia rufescens, and employed similarly for defense. "Ca. E. kahalalidefaciens" has lost many essential traits for free living and acts as a factory for kahalalide production. This interaction between a bacterium, an alga, and an animal highlights the importance of chemical defense in the evolution of complex symbioses.