A strain of Bacillus thuringiensis (633) with lepidopteran activity was selected for high chitinase activity using an in vitro assay. Incubation of this strain with N-methyl-N'-nitro-N-nitrosoguanidine resulted in several colonies exhibiting clearing zones after 24 hr. when plated on nutrient agar containing chitin. One colony was selected (634) and assayed in vitro for fungicidal activity against Aspergillus flavus and Alternaria solani. In both cases, 634 inhibited growth of the fungi, whereas 633 did not. In peanut field trials, initial seed treatments using 634 significantly reduced Aspergillus spp. fungal colonization and aflatoxin concentration of the harvested peanuts when compared to the untreated control. Results of glasshouse assays of peanuts grown in pots demonstrate that 634 (used as a seed treatment) also significantly reduced plant damage due to the lesser cornstalk borer, Elasmopalpus lignosellus. This soil insect causes direct damage to the peanut peg and pod which also allows easier penetration by Aspergillus. Current research has focused on enhancing the fungicidal activity of 634 by expressing the antifungal protein, osmotin. Results of these studies and the possibility of using B. thuringiensis for concurrent control of more than one type of pest will be discussed.