Diverse insect species harbor symbiotic bacteria, which play important roles such as provisioning nutrients and providing defense against natural enemies [1-6]. Whereas nutritional symbioses are often indispensable for both partners, defensive symbioses tend to be of a facultative nature [1-12]. The Asian citrus psyllid Diaphorina citri is a notorious agricultural pest that transmits Liberibacter spp. (Alphaproteobacteria), causing the devastating citrus greening disease or Huanglongbing [13, 14]. In a symbiotic organ called the bacteriome, D. citri harbors two distinct intracellular symbionts: a putative nutrition provider, Carsonella_DC (Gammaproteobacteria), and an unnamed betaproteobacterium with unknown function [15], for which we propose the name "Candidatus Profftella armatura." Here we report that Profftella is a defensive symbiont presumably of an obligate nature with an extremely streamlined genome. The genomes of Profftella and Carsonella_DC were drastically reduced to 464,857 bp and 174,014 bp, respectively, suggesting their ancient and mutually indispensible association with the host. Strikingly, 15% of the small Profftella genome encoded horizontally acquired genes for synthesizing a novel polyketide toxin. The toxin was extracted, pharmacologically and structurally characterized, and designated diaphorin. The presence of Profftella and its diaphorin-biosynthetic genes was perfectly conserved in the world's D. citri populations.