Pseudomonas fluorescens strain G308 isolated from barley leaves produces a novel antibiotic substance that was purified by preparative TLC and HPLC and identified as N-mercapto-4-formylcarbostyril (Cbs) by LC/DAD, IR, LC-ES(+)/MS, LC-ES(-)/MS, GC-EI/MS, LC-HRES(+)/MS, mass isotope ratios analysis, 1H NMR and 13C NMR analysis. The purified new antibiotic compound is effective against many phytopathogenic fungi in vitro. The compound inhibited at 25 ppm spore germination and germ tube growth of the following fungi; Fusarium oxysporum f. sp. lycopersici, Fusarium culmorum, Cladosporium cucumerinum and Colletotrichum lagenarium. At concentrations up to 125 ppm, the compound did not interfere with release of zoospores from sporangia and germination of encysted zoospores of Phytophthora infestans.