Abstract BACKGROUND Pine wilt disease, caused by pinewood nematode (PWN, Bursaphelenchus xylophilus ), is a severe global pine disease. Current controls have limitations: physical methods only slow spread; long‐term use of chemical/bio‐pesticides raises environmental concerns; and effective microbial agents remain difficult to screen. Existing pesticides mostly target PWN directly, with limited consideration of PWN‐associated bacteria's roles. This study innovatively used fermentation products of Hypoxylon fungus sj18 to regulate PWN‐associated bacteria to suppress PWNs. RESULTS Laboratory assays showed that crude fermentation products of Hypoxylon spp. strain sj18 achieved >95% PWN mortality within 6 h. These metabolites induced shifts in PWN‐associated bacterial communities: enriching nematicidal Serratia (20.2‐fold) and Delftia (6.0‐fold) and inhibiting Chryseobacterium (86.3% reduction). Nematicidal activity was abolished in axenic or antibiotic‐pretreated nematodes, confirming dependence on microbial modulation. Serratia nematodiphila Ser‐3 was identified as a critical mediating strain through reconstitution experiments involving axenic nematodes and individual PWN‐associated bacteria. Trunk injection of high‐dose sj18 (0.2 g cm −1 diameter at breast height) achieved 16.6–85.7% PWN population reduction rate across six sites, showing no significant difference from the commercial emamectin benzoate in five sites under field conditions. Bioactivity‐guided fractionation identified 54 constituents, with components A (oligopeptides EQCSCPQ and DLYVMF) and B (maltose) as key effectors. CONCLUSION The fermentation products of Hypoxylon fungus sj18 indirectly control PWN by modulating PWN‐associated bacteria. The mechanism links to the nematicidal activity of bacteria induced by specific oligopeptides and sugars. Field trials demonstrated comparable protective efficacy to conventional nematicides, offering an eco‐friendly biocontrol strategy for pine wilt disease. © 2025 Society of Chemical Industry.