Bacillus subtilis NCD-2 is an excellent biocontrol agent for tomato gray mold and cotton soil-borne diseases. The fengycin lipopeptides serve as a major role in its biocontrol ability. A previous study revealed that insertion of degQ with the mini-Tn10 transposon decreased the antifungal activity of strain NCD-2 against the growth of Botrytis cinerea. To clarify the regulation of degQ on the production of fengycin, we deleted degQ by in-frame mutagenesis. Compared with the wild-type strain NCD-2, the degQ-null mutant had decreased extracellular protease and cellulase activities as well as antifungal ability against the growth of B. cinerea in vitro. The lipopeptides from the degQ-null mutant also had significantly decreased antifungal activity against B. cinerea in vitro and in vivo. This result was confirmed by the decreased fengycin production in the degQ-null mutant that was detected by fast protein liquid chromatography analysis. Quantitative reverse transcription PCR further demonstrated that degQ positively regulated the expression of the fengycin synthetase gene. In addition, the degQ-null mutant also had a flatter colony phenotype and significantly decreased biofilm formation ability relative to the wild-type strain. All of those characteristics from degQ-null mutant could be restored to the strain NCD-2 wild-type level by complementation of intact degQ in the mutant. Therefore, DegQ may be an important regulator of fengycin production and biofilm formation in B. subtilis NCD-2.