<jats:title>Summary</jats:title><jats:p>Xenocoumacin 1 (Xcn1) and xenocoumacin 2 (Xcn2) are the major antimicrobial compounds produced by <jats:italic>Xenorhabdus nematophila</jats:italic>. To study the role of Xcn1 and Xcn2 in the life cycle of <jats:italic>X. nematophila</jats:italic> the 14 gene cluster (<jats:italic>xcnA–N</jats:italic>) required for their synthesis was identified. Overlap RT‐PCR analysis identified six major <jats:italic>xcn</jats:italic> transcripts. Individual inactivation of the non‐ribosomal peptide synthetase genes, <jats:italic>xcnA</jats:italic> and <jats:italic>xcnK</jats:italic>, and polyketide synthetase genes, <jats:italic>xcnF</jats:italic>, <jats:italic>xcnH</jats:italic> and <jats:italic>xcnL</jats:italic>, eliminated Xcn1 production. Xcn1 levels and expression of <jats:italic>xcnA–L</jats:italic> were increased in an <jats:italic>ompR</jats:italic> strain while Xcn2 levels and <jats:italic>xcnMN</jats:italic> expression were reduced. Xcn1 production was also increased in a strain lacking acetyl‐phosphate that can donate phosphate groups to OmpR. Together these findings suggest that OmpR‐phosphate negatively regulates <jats:italic>xcnA–L</jats:italic> gene expression while positively regulating <jats:italic>xcnMN</jats:italic> expression. HPLC‐MS analysis revealed that Xcn1 was produced first and was subsequently converted to Xcn2. Inactivation of <jats:italic>xcnM</jats:italic> and <jats:italic>xcnN</jats:italic> eliminated conversion of Xcn1 to Xcn2 resulting in elevated Xcn1 production. The viability of the <jats:italic>xcnM</jats:italic> strain was reduced 20‐fold relative to the wild‐type strain supporting the idea that conversion of Xcn1 to Xcn2 provides a mechanism to avoid self‐toxicity. Interestingly, inactivation of <jats:italic>ompR</jats:italic> enhanced cell viability during prolonged culturing.