The Bacillus subtilis strain NCD-2 is an important biocontrol agent against cotton verticillium wilt and cotton sore shin in the field, which are caused by Verticillium dahliae Kleb and Rhizoctonia solani Kuhn, respectively. A mutant of strain NCD-2, designated M216, with decreased antagonism to V. dahliae and R. solani, was selected by mini-Tn10 mutagenesis and in vitro virulence screening. The inserted gene in the mutant was cloned and identified as the phoR gene, which encodes a sensor kinase in the PhoP/PhoR two-component system. Compared to the wild-type strain, the APase activities of the mutant was decreased significantly when cultured in low phosphate medium, but no obvious difference was observed when cultured in high phosphate medium. The mutant also grew more slowly on organic phosphate agar and lost its phosphatidylcholine-solubilizing ability. The suppression of cotton seedling damping-off in vivo and colonization of the rhizosphere of cotton also decreased in the mutant strain when compared with the wild type strain. All of these characteristics could be partially restored by complementation of the phoR gene in the M216 mutant.