A Bacillus licheniformis producing an antifungal principle active against a wide variety of plant pathogenic fungi has been isolated. The microorganism was obtained from the rhizosphere of perennial ryegrass (Lolium perenne L.). The type isolate, strain PR1-36a, is particularly antagonistic to filamentous fungi, including Rhizoctonia and Magnaporthe. The microorganism was shown to be effective as a biocontrol agent for control of Fusarium seedling blight in corn. The antifungal principle produced by the microorganism is diffusible and may be purified by acid precipitation of the culture fluid, followed by ethanol extraction. The antifungal principle is fungistatic against several diverse species of fungi, and shows particularly strong activity against filamentous fungi, many of which are serious plant pathogens. Methods are provided for producing and using antifungal strains of Bacillus licheniformis, and antifungal principles produced therefrom, in treatment of soils, planting media, seeds and plant parts for control of various fungal plant diseases.