Photorhabdus luminescens is a symbiont of nematodes and a broad-spectrum insect pathogen. The complete genome sequence of strain TT01 is 5,688,987 base pairs (bp) long and contains 4,839 predicted protein-coding genes. Strikingly, it encodes a large number of adhesins, toxins, hemolysins, proteases and lipases, and contains a wide array of antibiotic synthesizing genes. These proteins are likely to play a role in the elimination of competitors, host colonization, invasion and bioconversion of the insect cadaver, making P. luminescens a promising model for the study of symbiosis and host-pathogen interactions. Comparison with the genomes of related bacteria reveals the acquisition of virulence factors by extensive horizontal transfer and provides clues about the evolution of an insect pathogen. Moreover, newly identified insecticidal proteins may be effective alternatives for the control of insect pests.