Xenorhabdus is a bacterial symbiont of entomopathogenic Steinernema nematodes and is pathogenic for insects. Its life cycle involves a stage inside the insect cadaver, in which it competes for environmental resources with microorganisms from soil and the insect gut. Xenorhabdus is, thus, a useful model for identifying new interbacterial competition systems. For the first time, in an entomopathogenic bacterium, Xenorhabdus doucetiae strain FRM16, we identified a cdi-like locus. The cdi loci encode contact-dependent inhibition (CDI) systems composed of proteins from the two-partner secretion (TPS) family. CdiB is the outer membrane protein and CdiA is the toxic exoprotein. An immunity protein, CdiI, protects bacteria against inhibition. We describe here the growth inhibition effect of the toxic C-terminus of CdiA from X. doucetiae FRM16, CdiA-CTFRM16, following its production in closely and distantly related enterobacterial species. CdiA-CTFRM16 displayed Mg2+-dependent DNase activity, in vitro. CdiA-CTFRM16-mediated growth inhibition was specifically neutralized by CdiIFRM16. Moreover, the cdi FRM16 locus encodes an ortholog of toxin-activating proteins C that we named CdiCFRM16. In addition to E. coli, the cdiBCAI-type locus was found to be widespread in environmental bacteria interacting with insects, plants, rhizospheres and soils. Phylogenetic tree comparisons for CdiB, CdiA and CdiC suggested that the genes encoding these proteins had co-evolved. By contrast, the considerable variability of CdiI protein sequences suggests that the cdiI gene is an independent evolutionary unit. These findings further characterize the sparsely described cdiBCAI-type locus.