The black soldier fly larvae (BSFL) can transform organic waste into high-end proteins, lipids, chitin, biodiesel, and melanin at an industrial scale. But scaling up of its production capacity has also posed health risks to the insect itself. In this investigation, larval “soft rot” which is occurring in mass production facilities that cause larval developmental inhibition and a certain degree of death was reported. Responsible pathogen GX6 was isolated from BSFL with “soft rot” and identified to be Paenibacillus thiaminolyticus. No obvious impact on larval growth was observed when treated with GX6 spores, whereas mortality of 6-day-old BSFL increased up to 29.33% ± 2.05% when GX6 vegetative cells (1 × 106 cfu/g) were inoculated into the medium. Moreover, higher temperature further enhanced the BSFL mortality and suppressed larval development, but increasing substrate moisture showed the opposite effect. The middle intestine of infected larvae became swollen and transparent after dissection and examination. Transmission electron microscopy (TEM) observation indicated that GX6 had destroyed the peritrophic matrix and intestinal microvilli and damaged epithelial cells of larval gut. Furthermore, 16S rRNA gene sequencing analysis of intestinal samples revealed that gut microflora composition was significantly altered by GX6 infection as well. It can be noticed that Dysgonomonas, Morganella, Myroides, and Providencia bacteria became more numerous in the intestines of GX6-infected BSFL as compared to controls. This study will lay foundations for efficient control of “soft rot” and promote healthy development of the BSFL industry to contribute to organic waste management and circular economy.