Photorhabdus is an entomopathogenic bacterium belonging to the Enterobacteriaceae. The genome of the TT01 strain of Photorhabdus luminescens was recently sequenced and a large number of toxin-encoding genes were found. Genomic analysis predicted the presence on the chromosome of genes encoding a type three secretion system (TTSS), the main role of which is the delivery of effector proteins directly into eukaryotic host cells. We report here the functional characterization of the TTSS. The locus identified encodes the secretion/translocation apparatus, gene expression regulators and an effector protein - LopT - homologous to the Yersinia cysteine protease cytotoxin YopT. Heterologous expression in Yersinia demonstrated that LopT was translocated into mammal cells in an active form, as shown by the appearance of a form of the RhoA GTPase with modified electrophoretic mobility. In vitro study showed that recombinant LopT was able to release RhoA and Rac from human and insect cell membrane. In vivo assays of infection of the cutworm Spodoptera littoralis and the locust Locusta migratoria with a TT01 strain carrying a translational fusion of the lopT gene with the gfp reporter gene revealed that the lopT gene was switched on only at sites of cellular defence reactions, such as nodulation, in insects. TTSS-mutant did not induce nodule formation and underwent phagocytosis by insect macrophage cells, suggesting that the LopT effector plays an essential role in preventing phagocytosis and indicating an unexpected link between TTSS expression and the nodule reaction in insects