Entomopathogenic bacteria Xenorhabdus spp. produce secondary metabolites with potential antimicrobial activity for use in agricultural productions. This study evaluated the inhibitory effect of X. nematophila TB culture on plant pathogens Botrytis cinerea and Phytophthora capsici. The cell-free filtrate of TB culture showed strong inhibitory effects (>90%) on mycelial growth of both pathogens. The methanol-extracted bioactive compounds (methanol extract) of TB culture also had strong inhibitory effects on mycelial growth and spore germinations of both pathogens. The methanol extract (1000 μg/mL) and cell-free filtrate both showed strong therapeutic and protective effects (>70%) on grey mold both in detached tomato fruits and plants, and leaf scorch in pepper plants. This study demonstrates X. nematophila TB produces antimicrobial metabolites of strong activity on plant pathogens, with great potential for controlling tomato grey mold and pepper leaf scorch and being used in integrated disease control to reduce chemical application.