Insects are not only the most diverse group of animals on our planet, but also a huge reservoir for unusual microorganism which are a rich source of pharmaceutically interesting natural products. This review focuses on recent advances in the understanding of secondary metabolism of Bacillus thuringiensis, Pseudomonas entomophila, and Xenorhabdus and Photorhabdus bacteria all of which are entomopathogenic. Genome-sequencing projects revealed the capacity of these bacteria to produce several different secondary metabolites including peptides, polyketides, and hybrids of both. This richness for interesting compounds is reflected by an increasing number of compounds that have been identified from these bacteria as discussed in this review.