Streptomyces species are best known for their ability to produce a wide array of medically and agriculturally important secondary metabolites. However, there is a growing number of species which, like Streptomyces scabies, can function as plant pathogens and cause scab disease on economically important crops such as potato. All of these species produce the phytotoxin thaxtomin, a nitrated dipeptide which inhibits cellulose synthesis in expanding plant tissue. The biosynthesis of thaxtomin involves conserved non-ribosomal peptide synthetases, P450 monooxygenases, and a nitric oxide synthase, the latter being required for nitration of the toxin. This nitric oxide synthase is also responsible for the production of diffusible nitric oxide by scab-causing streptomycetes at the host-pathogen interface, suggesting that nitric oxide production might play an additional role during the infection process. The thaxtomin biosynthetic genes are transcriptionally regulated by an AraC/XylS family regulator, TxtR, which is conserved in pathogenic streptomycetes and is encoded within the thaxtomin biosynthetic gene cluster. The TxtR protein specifically binds cellobiose, a known inducer of thaxtomin biosynthesis, and cellobiose is required for expression of the biosynthetic genes. A second virulence gene in pathogenic Streptomyces species, nec1, encodes a novel secreted protein that may suppress plant defence responses. The thaxtomin biosynthetic genes and nec1 are contained on a large mobilizable pathogenicity island; the transfer of this island to recipient streptomycetes likely explains the rapid emergence of new pathogenic species. The newly available genome sequence of S. scabies will provide further insight into the mechanisms utilized by pathogenic streptomycetes during plant-microbe interactions.