A newly isolated strain B69 with broad antimicrobial activity was identified as Paenibacillus elgii by 16S rRNA gene sequence analysis, along with physiological and biochemical characterization. Two antimicrobial compounds, named as Pelgipeptins A and B, were isolated from the culture medium using MCI GEL CHP20P column chromatography and HPLC methods. The molecular masses of Pelgipeptins A and B were 1072 and 1100 Da, respectively. The ESI-CID-MS and amino acid analysis suggested that both of them belonged to the polypeptin family, and Pelgipeptin A was unequivocally characterized as a new antibiotic. These two antibiotics were active against all the tested bacterial strains and displayed strong antifungal activity against several soil-borne fungal pathogens, with minimal inhibitory concentration values of 6.25-50 mug mL(-1). Furthermore, stability analysis indicated that the inhibitory activity of Pelgipeptins in the cell-free supernatant was unaffected during exposure to 60 degrees C for 2 h or a pH ranging from 1.0 to 8.0. Based on the strong antifungal activity and attractive biochemical properties, Pelgipeptins might provide an alternative resource of chemical pesticides for the biocontrol of plant diseases.