Xenorhabdus spp. are symbiotic bacteria associated with entomopathogenic nematodes to form a model complex that is used for the biological control of insect pests. These bacteria also produce secondary metabolites that have commercial potential in the pharmaceutical and agroforestry industries. Volatile organic compounds (VOCs) produced by the Xenorhabdus indica "strain AB" have been shown to have significant antifungal activity against Fusarium oxysporum f. sp. cucumerinum. Using gas chromatography-mass spectrometry, we identified 61 volatiles in the mixture of VOCs emitted by strain AB compared to a control strain, 6 of which were investigated for their antifungal activities. Of these, methyl anthranilate exhibited the highest mycelial growth suppression toward F. oxysporum, with a minimum inhibitory volume (MIV) of 50 μL/plate. Fluorescence assays, scanning electron microscopy, and measurements of the leakage of intracellular components revealed that the use of methyl anthranilate changed cell wall and cell membrane integrity as well as the permeability of the plasma membrane. Furthermore, methyl anthranilate treatment upregulated the transcription level of target genes related to redox reactions and the cell wall integrity pathway. The results suggest a novel mechanism used by Xenorhabdus spp. to overcome competitors during its life cycle and open up a new approach to using these bacteria in biological control. IMPORTANCE Fungal phytopathogens, particularly Fusarium oxysporum, are a major problem worldwide, especially in the postharvest of vital economic crops. Concerns about negative effects on the environment and human health have led to increasing restrictions on the use of chemical fungicides, and therefore, biological control agents are now being considered alternatives. It is in this context that we investigated the antifungal activity of VOCs produced by X. indica strain AB against F. oxysporum. We found that AB VOCs have a strong effect on the growth of the fungal phytopathogen. In addition, 85% of the identified volatile compounds were determined to be new compounds, opening up new lines of research to discover their properties, effects, and potential for pharmaceutical and agricultural applications. Antifungal assays proved that four of the six compounds with a high concentration in the GC-MS profile had a significant inhibitory effect on pathogen growth. Accordingly, this study opens up a new approach for the use of these bacteria in biocontrol.