Endophytic Bacillus sp. CY22 was previously isolated from the root interior of the balloon flower (Platycodon grandiflorum) (Cho et al., Biosci. Biotechnol. Biochem., 66, 1270-1275 (2002)). Three-month-old balloon flower seedlings were inoculated with 10(7) cfu/ml of strain CY22R3, a rifampicin-resistant strain of CY22, and external and internal root colonization was assessed 2 and 4 weeks later. After inoculation, large numbers of bacteria were observed on the root surface by scanning electron microscopy. More detailed studies using optical and transmission electron microscopy confirmed that Bacillus sp. CY22 was endophytically established within intercellular spaces, cortical cells, and aerenchymas of root. Also, Bacillus sp. CY22 showed antibiotic activities against several phytopathogens by producing the antibiotic iturin A. In the pot test, root rot of balloon flower seedlings caused by Rhizoctonia solani was suppressed when the Bacillus sp. CY22R3 was inoculated into the soil.