Interspecies interactions have been described for numerous bacterial systems, leading to the identification of chemical compounds that impact bacterial physiology and differentiation for processes such as biofilm formation. Here, we identified soil microbes that inhibit biofilm formation and sporulation in the common soil bacterium Bacillus subtilis. We did so by creating a reporter strain that fluoresces when the transcription of a biofilm-specific gene is repressed. Using this reporter in a coculture screen, we identified Pseudomonas putida and Pseudomonas protegens as bacteria that secrete compounds that inhibit biofilm gene expression in B. subtilis. The active compound produced by P. protegens was identified as the antibiotic and antifungal molecule 2,4-diacetylphloroglucinol (DAPG). Colonies of B. subtilis grown adjacent to a DAPG-producing P. protegens strain had altered colony morphologies relative to B. subtilis colonies grown next to a DAPG-null P. protegens strain (phlD strain). Using a subinhibitory concentration of purified DAPG in a pellicle assay, we saw that biofilm-specific gene transcription was delayed relative to transcription in untreated samples. These transcriptional changes also corresponded to phenotypic alterations: both biofilm biomass and spore formation were reduced in B. subtilis liquid cultures treated with subinhibitory concentrations of DAPG. Our results add DAPG to the growing list of antibiotics that impact bacterial development and physiology at subinhibitory concentrations. These findings also demonstrate the utility of using coculture as a means to uncover chemically mediated interspecies interactions between bacteria.