The benzoxazolinones, specifically benzoxazolin-2(3H)-one (BOA), are important transformation products of the benzoxazinones that can serve as allelochemicals providing resistance to maize from pathogenic bacteria, fungi, and insects. However, maize pathogens such as Fusarium verticillioides are capable of detoxifying the benzoxazolinones to 2-aminophenol (AP), which is converted to the less toxic N-(2-hydroxyphenyl) malonamic acid (HPMA) and 2-acetamidophenol (HPAA). As biocontrol strategies that utilize a species of endophytic bacterium, Bacillus mojavensis, are considered efficacious as a control of this Fusarium species, the in vitro transformation and effects of BOA on growth of this bacterium was examined relative to its interaction with strains of F. verticillioides. The results showed that a red pigment was produced and accumulated only on BOA-amended media when wild type and the progeny of genetic crosses of F. verticillioides are cultured in the presence of the bacterium. The pigment was identified as 2-amino-3H-phenoxazin-3-one (APO), which is a stable product. The results indicate that the bacterium interacts with the fungus preventing the usual transformation of AP to the nontoxic HPMA, resulting in the accumulation of higher amounts of APO than when the fungus is cultured alone. APO is highly toxic to F. verticillioides and other organisms. Thus, an enhanced biocontrol is suggested by this in vitro study.