The regulatory network and biological functions of the fungal secondary metabolite oosporein have remained obscure. has evolved the ability to parasitize insects and outcompete microbial challengers for assimilation of host nutrients. A novel zinc finger transcription factor, BbSmr1 ( secondary metabolite regulator 1), was identified in a screen for oosporein overproduction. Deletion of resulted in up-regulation of the oosporein biosynthetic gene cluster ( genes) and constitutive oosporein production. Oosporein production was abolished in double mutants of and a second transcription factor, , within the oosporein gene cluster (), indicating that BbSmr1 acts as a negative regulator of expression. Real-time quantitative PCR and a GFP promoter fusion construct of , the oosporein polyketide synthase, indicated that is expressed mainly in insect cadavers at 24-48 h after death. Bacterial colony analysis in -infected insect hosts revealed increasing counts until host death, with a dramatic decrease (∼90%) after death that correlated with oosporein production. In vitro studies verified the inhibitory activity of oosporein against bacteria derived from insect cadavers. These results suggest that oosporein acts as an antimicrobial compound to limit microbial competition on -killed hosts, allowing the fungus to maximally use host nutrients to grow and sporulate on infected cadavers.