Bacillus licheniformis N1, previously developed as a biofungicide formulation N1E to control gray mold disease of plants, was investigated to study the bacterial traits that may be involved in its biological control activity. Two N1E based formulations, bacterial cell based formulation PN1E and culture supernatant based formulation SN1E, were evaluated for disease control activity against gray mold disease of tomato and strawberry plants. Neither PN1E nor SN1E was as effective as the original formulation N1E. Fractionation of antifungal compounds from the bacterial culture supernatant of B. licheniformis N1 indicated that two different cyclic lipopeptides were responsible for the antimicrobial activity of the N1 strain. These two purified compounds were identified as iturin A and surfactin by HPLC and LCMS. The purified lipopeptides were evaluated for plant disease control activity against seven plant diseases. Crude extracts and purified compounds applied at 500 <TEX>${\mu}g/ml$</TEX> concentration controlled tomato gray mold, tomato late blight and pepper anthracnose effectively with over 70% disease control value. While iturin showed broad spectrum activity against all tested plant diseases, the control activity by surfactin was limited to tomato gray mold, tomato late blight, and pepper anthracnose. Although antifungal compounds from B. licheniformis N1 exhibited disease control activity, our results suggested that bacterial cells present in the N1E formulation also contribute to the disease control activity together with the antifungal compounds.