Diverse bacterial species possess the ability to produce the auxin phytohormone indole-3-acetic acid (IAA). Different biosynthesis pathways have been identified and redundancy for IAA biosynthesis is widespread among plant-associated bacteria. Interactions between IAA-producing bacteria and plants lead to diverse outcomes on the plant side, varying from pathogenesis to phyto-stimulation. Reviewing the role of bacterial IAA in different microorganism-plant interactions highlights the fact that bacteria use this phytohormone to interact with plants as part of their colonization strategy, including phyto-stimulation and circumvention of basal plant defense mechanisms. Moreover, several recent reports indicate that IAA can also be a signaling molecule in bacteria and therefore can have a direct effect on bacterial physiology. This review discusses past and recent data, and emerging views on IAA, a well-known phytohormone, as a microbial metabolic and signaling molecule.