Four strains of Bacillus thuringiensis were screened for their chitinolytic activity on colloidal chitin. B. thuringiensis var. aizawai HD-137 with the GenBank accession number HM173355 showed the highest chitinase activity, which was recorded after 2 days of incubation. The optimum condition for high chitinase production was Nutrient Yeast extract, Salt Medium, NYSM, with 0.2% colloidal chitin, two days of incubation, pH 6 and 30°C. The novel strain B. thuringiensis var. aizawai HD-137 is also considered as a powerful phytopathogenic control agent in which it showed inhibition of the mycelial growth of some phytopathogenic fungi, Alternaria solani, Rhizopus B1 and B2, Fusarium solani and Aspergillus flavus. The clear zones of mycelial inhibition ranged from 12 to 19mm. The partial nucleotides sequence of chitinase gene from B. thuringiensis var. aizawai HD-137 showed similarities to the chitinase producing bacteria in the GenBank, and it was more related to B. thuringiensis (AB699714, GQ921840 and GQ921842) and B. ehimensis chi60 (AB110081). It is obvious that the B. thuringiensis var. aizawai HD-137 is considered as a significant biocontrol agent against phytopathogenic fungi