Pasteuria penetrans is a gram-positive, endospore-forming eubacterium that apparently is a member of the Bacillus-Clostridium clade. It is an obligate parasite of root knot nematodes (Meloidogyne spp.) and preferentially grows on the developing ovaries, inhibiting reproduction. Root knot nematodes are devastating root pests of economically important crop plants and are difficult to control. Consequently, P. penetrans has long been recognized as a potential biocontrol agent for root knot nematodes, but the fastidious life cycle and the obligate nature of parasitism have inhibited progress on mass culture and deployment. We are currently sequencing the genome of the Pasteuria bacterium and have performed amino acid level analyses of 33 bacterial species (including P. penetrans) using concatenation of 40 housekeeping genes, with and without insertions/deletions (indels) removed, and using each gene individually. By application of maximum-likelihood, maximum-parsimony, and Bayesian methods to the resulting data sets, P. penetrans was found to cluster tightly, with a high level of confidence, in the Bacillus class of the gram-positive, low-G+C-content eubacteria. Strikingly, our analyses identified P. penetrans as ancestral to Bacillus spp. Additionally, all analyses revealed that P. penetrans is surprisingly more closely related to the saprophytic extremophile Bacillus haladurans and Bacillus subtilis than to the pathogenic species Bacillus anthracis and Bacillus cereus. Collectively, these findings strongly imply that P. penetrans is an ancient member of the Bacillus group. We suggest that P. penetrans may have evolved from an ancient symbiotic bacterial associate of nematodes, possibly as the root knot nematode evolved to be a highly specialized parasite of plants.