Antagonism is a common behavior seen between microbes in nature. Alcaligenes ammonioxydans HO-1 converts ammonia to nitrogen under aerobic conditions, which leads to the accumulation of extracellular hydroxylamine (HA), providing pronounced growth advantages against many bacterial genera, including Bacillus velezensis V4. In contrast, a mutant variant of A. ammonioxydans, strain 2-29, that cannot produce HA fails to antagonize other bacteria. In this article, we demonstrate that cell-free supernatants derived from the antagonistic HO-1 strain were sufficient to reproduce the antagonistic behavior and the efficiency of this inhibition correlated strongly with the HA content of the supernatant. Furthermore, reintroducing the capacity to produce HA to the 2-29 strain or supplementing bacterial co-cultures with HA restored antagonistic behavior. The HA-mediated antagonism was dose-dependent and affected by the temperature, but not by pH. HA caused a decline in biomass, cell aggregation, and hydrolysis of the cell wall in exponentially growing B. velezensis bulk cultures. Analysis of differential gene expression identified a series of genes modulating multicellular behavior in B. velezensis. Genes involved in motility, chemotaxis, sporulation, polypeptide synthesis, and non-ribosomal peptide synthesis were all significantly downregulated in the presence of HA, whereas autolysis-related genes showed upregulation. Taken together, these findings indicate that HA affects the population response of coexisting strains and also suggest that A. ammonioxydans HO-1 antagonize other bacteria by producing extracellular HA that, in turn, acts as a signaling molecule.