Pseudomonas fluorescens strains are known to produce a wide range of secondary metabolites including phenazines, siderophores, pyoluteorin, and 2,4 diacetylphloroglucinol (DAPG). DAPG is of particular interest because of its antifungal properties and because its production is associated with inhibition of phytopathogenic fungi in natural disease-suppressive soils. This trait has been exploited to develop strains of P. fluorescens that have potential application as biocontrol agents. Although the biochemistry, genetics and regulation of DAPG production have been well-studied, relatively little is known about how DAPG inhibits fungal growth and how fungi respond to DAPG. Employing a yeast model and a combination of phenotypic assays, molecular genetics and molecular physiological probes, we established that inhibition of fungal growth is caused by impairment of mitochondrial function. The effect of DAPG on yeast is largely fungistatic but DAPG also induces the formation of petite cells. Expression of the multidrug export proteins Pdr5p and Snq2p is increased by DAPG-treatment but this appears to be a secondary effect of mitochondrial damage as no role in enhancing DAPG-tolerance was identified for either Pdr5p or Snq2p.