Antibacterial substance produced by Streptomyces sioyaensis, obtained from soil and active as a biological control agent against Erwinia carotovora sp. carotovora, was extracted, isolated and purified to determine the mechanism of disease suppression by this strain. Cultures of S. sioyaensis were extracted with chloroform. Both the culture filtrate and the chloroform extract of the strain showed strong growth inhibition against phytopathogen E. carotovora sp. carotovora The chloroform extract of starch-nitrate broth media of S. sioyaensis yielded a white powder antibacterial metabolite by chromatographic technique and was identified as 2-(p-methoxybenzyl)-3,4-pyrrolidinediol-3-acetate on the basis of spectral data.. The structure of the bioactive substance was determined by elemental analysis and by ultraviolet (UV), Infra-red (IR), nuclear magnetic resonance (NMR) and mass spectra. From elementary analysis and mass spectroscopic measurements, the molecular formula appeared to be C14H19O4N. The physico-chemical characterization including molecular formula revealed that the isolated antibacterial agent was similar to anisomycin. The bioactive substance showed high antibacterial activity against E. carotovora sp. carotovora, the causative agent of potato soft rot. This substance may be involved in disease suppression by S. sioyaensis.