Purpureocillium lilacinum of Ophiocordycipitaceae is one of the most promising and commercialized agents for controlling plant parasitic nematodes, as well as other insects and plant pathogens. However, how the fungus functions at the molecular level remains unknown. Here, we sequenced two isolates (PLBJ-1 and PLFJ-1) of P. lilacinum from different places Beijing and Fujian. Genomic analysis showed high synteny of the two isolates, and the phylogenetic analysis indicated they were most related to the insect pathogen Tolypocladium inflatum. A comparison with other species revealed that this fungus was enriched in carbohydrate-active enzymes (CAZymes), proteases and pathogenesis related genes. Whole genome search revealed a rich repertoire of secondary metabolites (SMs) encoding genes. The non-ribosomal peptide synthetase LcsA, which is comprised of ten C-A-PCP modules, was identified as the core biosynthetic gene of lipopeptide leucinostatins, which was specific to P. lilacinum and T. ophioglossoides, as confirmed by phylogenetic analysis. Furthermore, gene expression level was analyzed when PLBJ-1 was grown in leucinostatin-inducing and non-inducing medium, and 20 genes involved in the biosynthesis of leucionostatins were identified. Disruption mutants allowed us to propose a putative biosynthetic pathway of leucinostatin A. Moreover, overexpression of the transcription factor lcsF increased the production (1.5-fold) of leucinostatins A and B compared to wild type. Bioassays explored a new bioactivity of leucinostatins and P. lilacinum: inhibiting the growth of Phytophthora infestans and P. capsici. These results contribute to our understanding of the biosynthetic mechanism of leucinostatins and may allow us to utilize P. lilacinum better as bio-control agent.