Biodiversity and ecosystem functioning research typically shows positive diversity- productivity relationships. However, local increases in species richness can increase competition within trophic levels, reducing the efficacy of intertrophic level population control. Pseudomonas spp. are a dominant group of soil bacteria that play key roles in plant growth promotion and control of crop fungal pathogens. Here we show that Pseudomonas spp. richness is positively correlated with take-all disease in wheat and with yield losses of ~3 t/ha in the field. We modeled the interactions between Pseudomonas and the take-all pathogen in abstract experimental microcosms, and show that increased bacterial genotypic richness escalates bacterial antagonism and decreases the ability of the bacterial community to inhibit growth of the take-all pathogen. Future work is required to determine the generality of these negative biodiversity effects on different media and directly at infection zones on root surfaces. However, the increase in competition between bacteria at high genotypic richness and the potential loss of fungal biocontrol activity highlights an important mechanism to explain the negative Pseudomonas diversity-wheat yield relationship we observed in the field. Together our results suggest that the effect of biodiversity on ecosystem functioning can depend on both the function and trophic level of interest.