A chitinolytic bacterial strain having strong antifungal activity was isolated and identified as Burkholderia cepacia MPC-7 based on 16S rRNA gene analysis. MPC- 7 solubilized insoluble phosphorous in hydroxyapatite agar media. It produced gluconic acid and 2-ketogluconic acid related to the decrease in pH of broth culture. The antagonist produced benzoic acid (BA) and phenylacetic acid (PA). The authentic compounds, BA and PA, showed a broad spectrum of antimicrobial activity against yeast, several bacterial and fungal pathogens in vitro. To demonstrate the biocontrol efficiency of MPC-7 on late blight disease caused by Phytophthora capsici, pepper plants in pot trials were treated with modified medium only (M), M plus zoospore inoculation (MP), MPC-7 cultured broth (B) and B plus zoospore inoculation (BP). With the sudden increase in root mortality, plants in MP wilted as early as five days after pathogen inoculation. However, plant in BP did not show any symptom of wilting until five days. Root mortality in BP was markedly reduced for as much as 50%. Plants in B had higher dry weight, P concentration in root, and larger leaf area compared to those in M and MP. These results suggested that B. cepacia MPC-7 should be considered as a candidate for the biological fertilizer as well as antimicrobial agent for pepper plants.