Competition is one of the fundamental driving forces of natural selection. Beauveria bassiana is a soil and plant phylloplane/root fungus capable of parasitizing insect hosts. Soil and plant environments are often enriched with other fungi against which B. bassiana competes for survival. Here, we report an antifungal peptide (BbAFP1), specifically expressed and localized to the conidial cell wall and is released into the surrounding microenvironment inhibiting growth of competing fungi. B. bassiana strains expressing BbAFP1, including overexpression strains, inhibited growth of Alternaria brassicae in co-cultured experiments, whereas targeted gene deletion of BbAFP1 significantly decreased (25%) this inhibitory effect. Recombinant BbAFP1 showed chitin and glucan binding abilities, and growth inhibition of a wide range of phytopathogenic fungi by disrupting membrane integrity and eliciting reactive oxygen species (ROS) production. A phenylalanine residue (F50) contributes to chitin binding and antifungal activity, but was not required for the latter. Expression of BbAFP1 in tomato resulted in transgenic plants with enhanced resistance to plant fungal pathogens. These results highlight the importance of fungal competition in shaping primitive competition strategies, with antimicrobial compounds that can be embedded in the spore cell wall to be released into the environment during the critical initial phases of germination for successful growth in its environmental niche. Furthermore, these peptides can be exploited to increase plant resistance to fungal pathogens.