Pseudozyma spp. are yeast-like fungi, classified in the Ustilaginales, which are mostly epiphytic or saprophytic and are not pathogenic to plants. Several Pseudozyma species have been reported to exhibit biological activity against powdery mildews. However, previous studies have reported that Pseudozyma aphidis, which can colonize plant surfaces, is not associated with the collapse of powdery mildew colonies. In this report, we describe a novel P. aphidis strain and study its interactions with its plant host and the plant pathogen Botrytis cinerea. This isolate was found to secrete extracellular metabolites that inhibit various fungal pathogens in vitro and significantly reduce B. cinerea infection in vivo. Moreover, P. aphidis sensitized Arabidopsis (Arabidopsis thaliana) plants' defense machinery via local and systemic induction of PATHOGENESIS-RELATED1 (PR1) and PLANT DEFENSIN1.2 (PDF1.2) expression. P. aphidis also reduced B. cinerea infection, locally and systemically, in Arabidopsis mutants impaired in jasmonic acid (JA) or salicylic acid (SA) signaling. Thus, in addition to direct inhibition, P. aphidis may inhibit B. cinerea infection via induced resistance in a manner independent of SA, JA, and Nonexpressor of PR1 (NPR1). P. aphidis primed the plant defense machinery and induced stronger activation of PDF1.2 after B. cinerea infection. Finally, P. aphidis fully or partially reconstituted PR1 and PDF1.2 expression in npr1-1 mutant and in plants with the SA hydroxylase NahG transgene, but not in a jasmonate resistant1-1 mutant, after B. cinerea infection, suggesting that P. aphidis can bypass the SA/NPR1, but not JA, pathway to activate PR genes. Thus, either partial gene activation is sufficient to induce resistance, or the resistance is not directed solely through PR1 and PDF1.2 but probably through other pathogen-resistance genes or pathways as well.