Sclerotinia stem rot caused by Sclerotinia sclerotiorum (Lib.) de Bary is an economically important pathogen on canola (Brassica nanups L.). Due to the increasing public concerns of fungicide usage and the limitations of cultural methods, biological control is emerging as a promising alternative to control S. sclerotiorum in an environmentally-friendly way. Several bacterial strains, mainly Bacillus spp., were isolated from canola and wheat plants. Eight Gram-positive bacterial strains were inhibitory against mycelial growth of S. sclerotiorum in intro. Three Bacillus spp., one Staphylococcus spp. and one Pseudomonas spp. (control) were tested in whole plant assays, and all of them achieved significant (P<0.05) disease suppression. An experiment in the greenhouse to investigate the optimal time of application showed that the highest disease suppression was achieved when B. amyloliquefaciens BS6 was inoculated at the same time as the pathogen. The field experiment (Trial two) in 2003 showed a significant (P<0.05) reduction of disease incidence and severity in bacteria-pre-treated plots, compared to control plots, even though the survival of bacterial populations of Pseudomonas chlororaphis PA-23 and B. amyloliquefaciens BS6 were low on the petals’ surface. The bacterial strains were effective against S. sclerotiorum under laboratory, greenhouse, and field conditions, and these results also suggest that antibiosis and plant induced resistance might be involved in the disease suppression. To identify antibiotic-related genes in these potential biocontrol bacterial agents, polymerase chain reaction (PCR) with specific primers was used. The sequencing of PCR products and BLAST search in the gene bank showed that P. chlororaphis PA-23 contains biosynthetic genes for phenazine-1-carboxylic acid, pyrrolnitrin and probably 2,4-diacetylphloroglucinol, and that B. thuringiensis/cereus BS8, B. cereus L and B. mycoides S contain zwittermicin A self-resistant gene. The significance of the presence of these genes is discussed. Induced resistance mediated by S. sclerotiorum and B. amyloliquefaciens BS6 was evaluated in a greenhouse study followed by analysis of the phenolic compounds from canola leaf extracts by high performance liquid chromatography (HPLC). Pre-treatment with bacteria significantly (P<0.05) reduced the disease symptoms on canola plants. The HPLC results indicated that the disease suppression from the bacterial pre-treatment was related to the induction of secondary metabolites in canola leaves. The HPLC results also showed that the inoculum of S. sclerotiorum was also associated with the induction of these compounds in canola leaves. The knowledge accumulated during this study has shown that the bacterial biocontrol agents tested have a great potential in controlling sclerotinia stem rot of canola. The understanding of the biocontrol mechanisms involved in the disease suppression would help optimize their biocontrol efficiency. Therefore, further studies on the role of bacterial antibiotics in disease suppression, and better understanding of plant induced resistance mediated by pathogen and bacterial agents are needed.