Methyl indole was isolated as a metabolite from the culture broth of terrestrial Streptomyces GW 14/587 strain which was fed with indole after two days growth and then inoculated for another two, three and four days to optimize the experiment condition for highest metabolite concentration. The structure of the isolated methyl indole was established using spectral techniques of HPLC-MS, EI-MS, 1H and 13CNMR. Also the bacterial extract showed a high selective phycotoxic activity against Scendensmus subspicatus among the different tested microalgae, yeast, fungi and bacteria.