Female houseflies, Musca domestica (Diptera: Muscidae), lay their eggs in ephemeral resources such as animal manure. Hatching larvae compete for essential nutrients with fungi that also colonize such resources. Both the well-known antagonistic relationship between bacteria and fungi and the consistent presence of the bacterium Klebsiella oxytoca on housefly eggs led us to hypothesize (1) that K. oxytoca, and possibly other bacteria on housefly eggs, help curtail the growth of fungal resource competitors and (2) that such fungi indeed adversely affect the development of housefly larvae. Bacteria washed from housefly eggs significantly reduced the growth of fungi in chicken manure. Nineteen bacterial strains and ten fungal strains were isolated from housefly eggs or chicken manure, respectively. Co-culturing each of all the possible bacterium-fungus pairs revealed that the bacteria as a group, but no single bacterium, significantly suppressed the growth of all fungal strains tested. The bacteria's adverse effect on fungi is due to resource nutrient depletion and/or the release of antifungal chemicals. Well-established fungi in resources significantly reduced the number of larval offspring that completed development to adult flies.