Photorhabdus is a genus of insect-pathogenic Gram-negative bacteria that also maintain a mutualistic interaction with nematodes from the family Heterorhabditis. This complex life cycle, involving different interactions with different invertebrate hosts, coupled with the amenability of the system to laboratory culture has resulted in the development of Photorhabdus as a model system for studying bacterial-host interactions. Photorhabdus is predicted to have an extensive secondary metabolism with the genetic potential to produce > 20 different small secondary metabolites. Therefore, this system also presents us with a unique opportunity to study the contribution of secondary metabolism to the environmental fitness of the producing organism in its natural habitat (i.e., the insect and/or the nematode). In vivo and in vitro studies have revealed that the vast majority of the genetic loci in Photorhabdus predicted to be involved in the production of secondary metabolites appear to be cryptic and, to date, although several have been characterized, only three compounds have been studied in any great detail: 3,5-dihydroxy-4-isopropylstilbene, the ß-lactam antibiotic carbapenem, and an anthraquinone pigment. In this chapter, we describe how these compounds are made and the role (if any) that they have during the interactions between Photorhabdus and its invertebrate hosts. We will also outline recent work on the regulation of secondary metabolism in Photorhabdus and comment on how this has led to an increased understanding of mutualism in this bacterium. © 2011 Elsevier Inc.