A phase variation has been reported in an entomopathogenic bacterium, Xenorhabdus nematophila. Compared to a wild type primary form, a secondary form usually lose several physiological and biochemical characters. This study showed that the phase variation of X. nematophila caused a significant alteration in its immunosuppressive activity and subsequent entomopathogenicity. A secondary form of X. nematophila was detected in laboratory colonies and exhibited significant differences in dye absorption and entomopathogenicity. In addition, the secondary form was different in production of eicosanoid-biosynthesis inhibitors (EBIs) compared to the primary form of X. nematophila. Production of oxindole and p-hydroxypropionic acid was significantly reduced in the culture broth of the secondary form of X. nematophila. The reduced EBI production resulted in significant suppression in the inhibitory effects on a cellular nodule formation and phenoloxidase activity. Culture broth of the primary form of X. nematophila significantly more enhanced the pathogenicity of Bacillus thuringiensis (Bt) than the culture broth of the secondary form. Furthermore, this study developed a high efficient ‘Dual Bt-Plus’ to control both lepidopteran insect pests of Plutella xylostella and Spodoptera exigua by mixing two effective Bt strains along with the addition of potent bacterial metabolites or 100-fold concentrated X. nematophila culture broth.