Technical Abstract: Strains of Trichoderma virens belonging to the 'P' group are ineffective as biocontrol agents of seedling disease in cotton, and they are pathogenic to susceptible cultivars. Those strains belonging to the 'Q' group are effective biocontrol agents of cotton seedling disease, and they are not pathogenic to cotton. To account for these behavioral differences, comparative assays were made of 'P' and 'Q' strains for production of phytotoxin, for cellulase, polygalacturonase and protease activity, for induction of phytoalexin synthesis in cotton roots, and for metabolism of pathogen germination stimulants. The results showed little difference in phyotoxin production or enzyme activity between the two groups, and that 'P' strain mutants deficient for viridiol production were still pathogenic to cotton. There was also no difference between strains in their ability to metabolize pathogen germination stimulants. HPLC analyses of extracts from roots treated with 'P' or 'Q' strains, however, showed that 'Q' strains induced high levels of phytoalexin synthesis, while 'P' strains did not. Treatment of seeds or seedling radicles with combination 'P' + 'Q' seed coat preparations or cultures filtrates, respectively, ameliorated seedling kill, and increased phytoalexin production in treated roots. These results indicate that an inability by 'P' strains to induce high levels of phytoalexin in cotton, not only makes them ineffective as biocontrol agents, but renders them pathogenic to susceptible cultivars. Induction by 'Q' strains of high levels of phytoalexin synthesis in cotton makes them effective biocontrol agents, and it inhibits their development in cotton roots which might lead to pathogenesis.