Thirteen bacterial strains isolated from a sample of Ulva californica were cultured, extracted, and assayed for antibiotic activity. The target strains were 2 gram-positive isolates from the same algal sample. When cultured in monoculture, 2 of the 13 isolates produced extracts with antimicrobial activity. More significantly, one Bacillus isolate (UA-094) produced indole and cyclo(Phe-Pro) at active levels upon challenge with a different Bacillus target strain. These mildly antibiotic compounds were barely detectable in extracts without challenge. This technique of competitive induction and enhancement could be a valuable tool in the search for new antibiotics.