Xenorhabdus and Photorhabdus bacteria, which live in mutualistic symbiosis with entomopathogenic nematodes, are currently recognised as an important source of bioactive compounds. During their extraordinary life cycle, these bacteria are capable of fine regulation of mutualism and pathogenesis towards two different hosts, a nematode and a wide range of insect species, respectively. Consequently, survival in a specific ecological niche favours the richness of biosynthetic gene clusters and respective metabolites with a specific structure and function, providing templates for uncovering new agrochemicals and therapeutics. To date, numerous studies have been published on the genetic ability of Xenorhabdus and Photorhabdus bacteria to produce biosynthetic novelty as well as distinctive classes of their metabolites with their activity and mechanism of action. Research shows diverse techniques and approaches that can lead to the discovery of new natural products, such as extract-based analysis, genetic engineering, and genomics linked with metabolomics. Importantly, the exploration of members of the Xenorhabdus and Photorhabdus genera has led to encouraging developments in compounds that exhibit pharmaceutically important properties, including antibiotics that act against Gram- bacteria, which are extremely difficult to find. This article focuses on recent advances in the discovery of natural products derived from these nematophilic bacteria, with special attention paid to new valuable leads for therapeutics.