Oxazolomycin was isolated and identified from Streptomyces sp. KBFP-2025 as an inhibitor against crown gall formation by using a potato tuber disk assay system. This compound inhibited the early step of crown gall formation, owing to antibacterial activity selectively against Agrobacterium tumefaciens. To study further the mechanism for tumor induction, we searched for compounds effective in crown gall formation from cultures of microorganisms isolated from soil samples using the potato tuber disk assay system. In this paper, we report the isolation and identification of oxazolomycin as a crown gall formation inhibitor, whose strong antibacterial activity against A. tumefaciens takes a major part in the inhibition. We also report its effect on plant cells and the possibility of its practical use for removing A. tumefaciens from transformed plant cells. Neooxazolomycin, a related compound isolated from the same culture, was found to be inactive against both A. tumefaciens and crown gall formation due to the lack of a β-lactone.