A new metabolite has been isolated for the first time from the culture broth of a symbiotic bacterium, Xenorhabdus nematophilus, and identified as N-(indol-3-ylethyl)-2-hydroxy-3 methylpentanamide (1) by spectroscopic methods. Our continued interest in the metabolites of Xenorhabdus has led to the discovery of this novel indole derivative from X. nematophilus strain BC1. The culture broth of X. nematophilus strain BC1 primary phase was subjected to solvent extraction and Si gel chromatography to isolate compound 1. Structural elucidation using 1H NMR, 13C NMR, MS, and IR spectra revealed the presence of a 3-indolyl substituent, a CH3CH(-R)CH2CH3 unit, a carbonyl group, and -OH/-NH groups, supporting the assigned structure. This is the first report of compound 1 from a natural source and the first indole derivative from this species of Xenorhabdus. Unlike previous indole derivatives from Xenorhabdus, 1 did not inhibit the growth of Bacillus subtilis at 100 µg/mL. In conclusion, this novel indole derivative demonstrates the diversity of Xenorhabdus metabolites and their potential as sources for pharmaceuticals and agrochemicals.