A fungivorous nematode, Aphelenchoides sp., was isolated from field soil by baiting with mycelium of the biocontrol fungus Trichoderma harzianum ThzID1, and subsequently was maintained on agar cultures of the fungus. Interactions between the nematode and the green fluorescent protein-producing transformant, T. harzianum ThzID1-M3, were investigated in both heat-treated (80°C, 30 min) and untreated field soil. ThzID1-M3 was identified in soil by epifluorescence microscopy. When ThzID1-M3 was added to soil as an alginate pellet formulation, addition of the nematode (10 per gram of soil) significantly reduced radial growth and recoverable populations of the fungus, and the effect was greater in heat-treated soil than in untreated soil. Addition of ThzID1-M3 to soil pretreated with the nematode (10 per gram of soil) stimulated nematode population growth for approximately 10 to 20 days, whereas nematode populations decreased in the absence of added Trichoderma sp. When sclerotia of Sclerotinia sclerotiorum were added to soil (10 per 200 g of soil) with ThzID1-M3 (40 pellets per 200 g of soil), addition of Aphe-lenchoides sp. (2,000 per 200 g of soil) reduced the number of sclerotia colonized by ThzID1-M3. These results suggest that fungivorous nematodes may be a significant biotic constraint on activity of biocontrol fungi in the field.