Our current understanding on how pathogens evolve relies on the hypothesis that pathogens' transmission is traded off against host exploitation. In this study, we surveyed the possibility that trade-offs determine the evolution of the bacterial insect pathogen, Xenorhabdus nematophila. This bacterium rapidly kills the hosts it infects and is transmitted from host cadavers to new insects by a nematode vector, Steinernema carpocapsae. In order to detect trade-offs in this biological system, we produced 20 bacterial lineages using an experimental evolution protocol. These lineages differ, among other things, in their virulence towards the insect host. We found that nematode parasitic success increases with bacteria virulence, but their survival during dispersal decreases with the number of bacteria they carry. Other bacterial traits, such as production of the haemolytic protein XaxAB, have a strong impact on nematode reproduction. We then combined the result of our measurements with an estimate of bacteria fitness, which was divided into a parasitic component and a dispersal component. Contrary to what was expected in the trade-off hypothesis, we found no significant negative correlation between the two components of bacteria fitness. Still, we found that bacteria fitness is maximized when nematodes carry an intermediate number of cells. Our results therefore demonstrate the existence of a trade-off in X. nematophila, which is caused, in part, by the reduction in survival this bacterium causes to its nematode vectors.