An antifungal bacterial strain, isolated from a greenhouse soil sample, inhibits growth of microflora nearby. It was selected for further studies of bacterial antifungal properties. This isolate was identified as a Pseudomonas sp. based on carbohydrate utilization, and other biochemical and physiological tests. Petri plate assay revealed that the Pseudomonas sp. exhibited antifungal activity against the plant pathogens, Pythium ultimum, Rhizoctonia solani, Phytophthora capsici, Botrytis cinerea and Fusarium oxysporum. Using direct inhibition bioassay on TLC plates after ethyl acetate extraction of the culture filtrate, we correlated antifungal activity with production of antifungal compounds. An antifungal antibiotic was isolated from the culture filtrate and was identified as N-butylbenzenesulphonamide. ED50, values of the N-butylbenzenesulphonamide against P. ultimum, P. capsici, R. solani, and B. cinerea were 73, 41, 33 and 102 ppm, respectively.