The over-prescription of antibiotics for treatment of infections is primarily to blame for the increase in bacterial resistance. Added to the problem is the slow rate at which novel antibiotics are discovered and the many processes that need to be followed to classify antimicrobials safe for medical use. Xenorhabdus spp. of the family Enterobacteriaceae, mutualistically associated with entomopathogenic nematodes of the genus Steinernema, produce a variety of antibacterial peptides, including bacteriocins, depsipeptides, xenocoumacins and PAX (peptide antimicrobial-Xenorhabdus) peptides, plus additional secondary metabolites with antibacterial and antifungal activity. The secondary metabolites of some strains are active against protozoa and a few have anti-carcinogenic properties. It is thus not surprising that nematodes invaded by a single strain of a Xenorhabdus species are not infected by other microorganisms. In this review, the antimicrobial compounds produced by Xenorhabdus spp. are listed and the gene clusters involved in synthesis of these secondary metabolites are discussed. We also review growth conditions required for increased production of antimicrobial compounds.