Screening for newer bioactive compounds from microbial metabolites resulted in the isolation of a novel antibiotic from the culture filtrate, Streptomyces sp 201, of a soil. The bioactive compound, with antifungal and antibacterial activity, was identified as 2-methylheptyl isonicotinate. The antifungal activity of live culture, culture broth and the isolated bioactive compound showed marked inhibition against dominant soil-borne phytopathogens such as Fusarium oxysporum Schlect, F moniliforme Sheldon, F semitectum Berkeley & Ravenel, F solani (Martius) Sacc and Rhizoctonia solani Kuehn. The compound had no effect on seed germination and seedling development as displayed by root and stem growth of the test plant species. In pot experiments with seedlings of cruciferous plants such as Raphanus sativus L (radish), Brassica campestris L (yellow mustard), Brassica oleracea var botrytis L (cauliflower), the antibiotic compound showed promising protective activity of 92% when seeds of the test plants were treated at a dose of 50 micrograms ml-1 prior to sowing. Seed treatment with a spore suspension (3 x 10(8) spores ml-1) of the Streptomyces sp 201 displayed protective activity in the range of 56-60%. Seeds coated with 2.5% methyl cellulose-amended spores of the antagonist showed protective activity in the range of 64-72%. Further, seed treatment with the culture filtrate of the antagonist also showed promising protective activity in the range of 64-84%.