It was collected 23 different samples of rhizosphere soil of different crop plants taken from different places in Iraq, and it was isolated from these samples 82 different bacterial isolates that are suspected to belong to the genus Pseudomonas The ability of these isolates in antagonizing or inhibiting the growth of some phytopathogenic fungi was tested. It was found that 17 different isolates from the 82 isolates were able to inhibit the growth of some of these fungi or have the ability to produce antifungal compound (and they were designated as OM1-OM17). These isolates (17) were identified and it was found that they belonged to the species of P. aeruginosa with the exception of one isolate which belonged to other species of the genus Pseudomonas. Screening was done for the 17 isolates that showed the ability to inhibit the growth of the fungi in order to select the best bacterial isolate depending on the diameter of inhibition zone of the growth of the test fungi caused by the growth of the bacterial isolates and by the action of the culture filtrate of these isolates on test fungi. It was found that the isolate P. aeruginosa OM13 was the best, isolate in its production of antifungal substance(s) or compound(s). Optimal conditions for the production of the antifungal compound(s) by the isolate P. aeruginosa OM13 were studied, and it was found that growing the bacterial isolate in Trypticase Soy Broth (TSB) medium (pH7) containing 1% glycerin and 1% urea at 28°C with shaking (100 rpm.) for 5 days were the best conditions, in which it was got (using the culture filtrate of the isolate grown in these conditions) the highest inhibition zone of the growth of the test fungus (Alternaria alternata). Different extraction methods of the active antifungal compound from the culture filtrate were used by using organic solvents, and it was found that the antifungal compound was existed in the organic layer. The best method for extraction was by treating the culture filtrate with chloroform, and after taking the organic layer, the solvent was evaporated from it, and the compound was eluted with acetone. From this modified method, the active compound was found as a single dark spot on the TLC plate under UV- light that had R, value of 0.44. Partial purification of the active antifungal compound was carried out using silica- gel TLC plate and followed by scraping the spots of the compound from the TLC plates, and eluted the active compound with acetone, then centrifuged to remove the silica-gel, and the partially purified compound characterized by larger inhibiting activity toward the test fungus when compared with the crude extract. An attempt to characterize the partially purified antifungal compound was done and results showed that the compound was basic in nature, instable to heat and acid treatment, and was soluble in water, chloroform, acetone, and methanol, and the compound was not of the siderophores types, and does not belong to the antibiotics pyrrolnitrin or pyoluteorin, beside that the compound was of ester type in nature which was confirmed by the FTIR analysis which indicated also that the compound was aromatic and contain aliphatic group. From the results of characterization tests, and depending on the R/ value, color, FTIR analysis, and solubility in water and organic solvents, it can be said that the active antifungal compound might be either a new derivative of the antibiotic phenazine or might be a new antibiotic that was aromatic in its structure and was of ester type in nature.