Strains of Enterobacter cloacae reported to be biological control agents of Pythium spp. induced cotton seedling disease were found to symmetrically inhibit fungal growth when grown in dual cultures. Inhibition of fungal growth by E. cloacae in partitioned plates indicated that the inhibitor was volatile. Distillation and low temperature trapping of released volatiles resulted in the capture of an antifungal compound that was identified as ammonia by mass spectroscopy. Assay of ammonia for activity against P. ultimum showed that the fungus was inhibited at low concentration. The addition of some sugars (D-galactose, D-glucose, sucrose, and B-methyl-D-glucoside) suppressed the production of ammonia by E. cloacae when added to the growth medium. Other sugars (3-0-methyl-D-glucose, D-trehalose, and L-sorbose) did not inhibit ammonia production. The sugars in the former group interfered with biocontrol activity, and the sugars in the latter group did not, in a previous study. These results indicate that ammonia production by E. cloacae may be the fungal growth-inhibiting part of the mechanism by which E. cloacae controls Pythium preemergence damping-off.