Effects of nematode-parasitic fungus, Paecilomyces lilacinus, on root-knot nematode, Meloidogyne hapla, and growth and yield of consecutively grown lettuce and pepper were evaluated and compared to three soil fumigants, Telone II, TeloneC-17 and Dowfune MC-II, in greenhouse plots from 1983 to 1984 at Milyang, Korea. The number of nematodes in fungus plots, Telone II plots, Telone C-17 plots, and Dowfume MC-II plots at 25 days after treatment were 22, 2, 24 and 0, respectively, while untreated control plots were 685. At 350 days after treatment, 66%, 98%, 98% and 96% control of root-knot nematodes were observed in fungus plots, Telone II plots, Telone C-17 plots, and Dowfume MC-II plots, respectively. Lettuce yields were increased 49%, 43%, 31% and 109% and pepper yields were increased 33%, 49%, 37%, and 95% in fungus plots, Telone II plots, Telone C-17 plots, and Dowfume MC-II plots, respectively. Fresh weight and plant height of pepper were higher only in fumigant treated plots than untreated control plots.