Aims: The aim of the present investigation was to determine the influence of Rhizoctonia solani and its pathogenicity factor on the production of nematicidal agent(s) by Pseudomonas fluorescens strain CHA0 and its GM derivatives in vitro and nematode biocontrol potential by bacterial inoculants in tomato. Methods and Results: One (Rs7) of the nine R. solani isolates from infected tomato roots inhibited seedling emergence and caused root rot in tomato. Thin layer chromatography revealed that culture filtrates of two isolates (Rs3 and Rs7) produced brown spots at Rf-values closely similar to synthetic phenylacetic acid (PAA), a phytotoxic factor. Filtrates from isolate Rs7, amended with the growth medium of P. fluorescens, markedly repressed nematicidal activity and PhlA'-'LacZ reporter gene expression of the bacteria in vitro. On the contrary, isolate Rs4 enhanced nematicidal potential of a 2,4-diacetylphloroglucinol overproducing mutant, CHA0/pME3424, of P. fluorescens strain CHA0 in vitro. Therefore, R. solani isolates Rs4 and Rs7 were tested more rigorously for their potential to influence biocontrol effectiveness of the bacterial agents. Methanol extract of the culture filtrates of PAA-producing isolate Rs7 resulting from medium amended with phenylalanine enhanced fungal repression of the production of nematicidal agents by bacteria, while amendments with zinc or molybdenum eliminated such fungal repression, thereby restoring bacterial potential to cause nematode mortality in vitro. A pot experiment was carried out, 3-week-old tomato seedlings were infested with R. solani isolates Rs4 or Rs7 and/or inoculated with Meloidogyne incognita, the root-knot nematode. The infested soil was treated with aqueous cell suspensions (10(8) CFU) of P. fluorescens strain CHA0 or its GM derivatives or left untreated (as a control). Observations taken 45 days after nematode inoculation revealed that, irrespective of the bacterial treatments, galling intensity per gram of fresh tomato roots was markedly higher in soil amended with isolate Rs4 than in Rs7-amended soils. Soil amendments with R. solani and the bacterial antagonists resulted in substantial reductions of the number of galls per gram of root. These results are contradictory to those obtained under in vitro conditions where culture filtrates of PAA-positive Rs7 repressed the production of nematicidal compounds. Plants grown in Rs7-amended soils, with or without bacterial inoculants, had lesser shoot and root weights than plants grown in nonamended or Rs4-amended soils. Moreover, amendments with Rs7 substantially retarded root growth and produced necrotic lesions that reduced the number of entry sites for invasion and subsequent infection by nematodes. Populations of P. fluorescens in the tomato rhizosphere were markedly higher in Rs7-amended soils. Conclusions: PAA-producing virulent R. solani drastically affects the potential of P. fluorescens to cause death of M. incognita juveniles in vitro and influences bacterial effectiveness to suppress nematodes in tomato roots. Significance and Impact of the Study: As most agricultural soils are infested with root-infecting fungi, including R. solani, it is likely that some PAA-producing isolates of the fungus may also be isolated from such soils. The inhibitory effect of PAA-producing R. solani on the biosynthesis of nematicidal agent(s) critical in biocontrol may reduce or even eliminate the effectiveness of fluorescent pseudomonads against root-knot nematodes, both in nursery beds and in field conditions. Introduction of bacterial inoculants, for the control of any plant pathogen, should be avoided in soils infested with PAA-producing R. solani. Alternatively, the agents could be applied together with an appropriate quantity of fungicide or chemicals such as zinc to create an environment more favourable for bacterial biocontrol action.