Based on morphological, cultural, physiological and biochemical characteristics studies, the bacterium s9730 which was isolated from an unidentified hydroid collected from Si Chang Island, Chonburi province, was identified as a species of the Alteromonas bacteria. The dichloromethane extract from the fermentation broth of the bacterium showed antibacterial activity against both Escherichia coli ATCC 25922 and Staphylococcus aureus ATCC 25923 bacteria. An indole alkaloid (isatin), together with two known diketopiperazines including cyclo (Gly-Pro) and cyclo (Pro-Leu), were obtained from the dichloromethane extract after the purification with chromatographic techniques. The structures of all compounds were determined based on analysis of their spectral data (UV, IR, MS and NMR). Isatin exhibited moderate antibacterial activity against both Escherichia coli ATCC 25922 and Staphylococcus aureu ATCC 25923 at the MIC of 62.5 mug/ml, and against the shrimp pathogens, Vibrio species, at the MIC of 31.3 mug/ml. It was found that the Alteromonas sp. s9730, after 3 days fermentation, could produce isatin up to 89% of the crude dichloromethane extracts.