BACKGROUNDSclerotium rolfsii is an extremely destructive phytopathogenic fungus that causes significant economic losses. Biocontrol strategies utilizing antagonistic microorganisms present a promising alternative for controlling plant pathogens. Bacillus megaterium L2 has been identified as a potential microbial biocontrol agent in our previous study; however, its efficacy in controlling pathogens has yet to meet current demands. This study aims to enhance the antifungal activity of strain L2 against S. rolfsii R‐67 through a two‐round mutagenesis strategy and to preliminarily investigate the mutagenesis mechanism of the high antifungal activity mutant.RESULTSWe obtained mutant Dr‐77 with the strongest antifungal activity against R‐67, and its cell‐free supernatant significantly reduced the infection potential of R‐67 to Amorphophallus konjac corms, which may be attributed to the antimicrobial compound phenylacetic acid (PAA), and PAA content in Dr‐77 (5.78 mg/mL) was 28.90 times higher than original strain L2. This compound exhibited strong antifungal ability against R‐67, with a half maximal effective concentration (EC50) value of 0.475 mg/mL, significantly inhibiting mycelial growth and destroying the ultrastructure of R‐67 at EC50 value. Notably, PAA also exhibited broad‐spectrum antifungal activity against six phytopathogens at EC50 value. Moreover, genome analysis revealed nine different gene mutations, including those involved in PAA biosynthesis, and the activities of prephenate dehydratase (PheA) and phenylacetaldehyde dehydrogenase (ALDH) in PAA biosynthesis pathway were significantly increased.CONCLUSIONThese results suggest that the elevated PAA content is a primary factor contributing to the enhanced antifungal activity of Dr‐77, and that this mutagenesis strategy offers valuable guidance for the breeding of functional microbial resources. © 2024 Society of Chemical Industry.