A bioassay-guided column chromatographic strategy was adopted in the present study to fractionate the culture extract of Photorhabdus temperata M1021 to identify potential insecticidal and antimicrobial compounds. An ethyl acetate (EtOAc) culture extract of P. temperata was assayed against Galleria mellonella larvae through intra-hemocoel injection and exhibited 100% insect mortality within 60 h. The EtOAc fraction and an isolated compound exhibited phenoloxidase (PO) inhibition of up to 60% and 63%, respectively. The compound was identified as 1,2-benzenedicarboxylic acid (phthalic acid, PA) by gas chromatography-mass spectrometry and nuclear magnetic resonance. PA exhibited insecticidal activity against G. mellonella in a dose-dependent manner, and 100% insect mortality was observed at 108 h after injection of 1 M PA. In a PO inhibition assay, 0.5 and 1 M concentrations of PA were found to inhibit PO activity by 74% and 82%, respectively; and in a melanotic nodule formation assay, nodule formation was significantly inhibited (27 and 10 nodules) by PA (0.5 and 1 M, respectively). PA was furthermore found to have substantial antioxidant activity and maximum antioxidant activity was 64.7% for 0.5 M PA as compare to control. Antibacterial activity was assessed by The MIC values ranged from 0.1 M to 0.5 M of PA. This study reports a multifunctional PA, a potential insecticidal agent, could a factor of insect mortality along with other toxins produced by P. temperata M1021.