Photorhabdus is a pathogen of insects that also maintains a mutualistic association with nematodes from the family Heterorhabditis. Photorhabdus colonizes the gut of the infective juvenile (U) stage of the nematode. The U infects an insect and regurgitates the bacteria and the bacteria reproduce to kill the insect. The nematodes feed on the resulting bacterial biomass until a new generation of Us emerges from the insect cadaver. Therefore, during its life cycle, Photorhabdus must (1) kill the insect host, (2) support nematode growth and development, and (3) be able to colonize the new generation of Us. In this review, functional genomic studies that have been aimed at understanding the molecular mechanisms underpinning each of these roles will be discussed. These studies have begun to reveal that distinct gene sets may be required for each of these interactions, suggesting that there is only a minimal genetic overlap between pathogenicity and mutualism in Photorhabdus.