Noble-rotted grapes are colonized by complex microbial populations. I isolated pigment-producing Metschnikowia strains from noble-rotted grapes that had antagonistic activity against filamentous fungi, yeasts, and bacteria. A red-maroon pigment was formed from a diffusible colorless precursor released by the cells into the medium. The conversion of the precursor required iron and could occur both in the cells (red colonies) and in the medium (red halos around colonies). The intensity of pigmentation was correlated with the intensity of the antimicrobial activity. Mutants that did not form pigment also lacked antifungal activity. Within the pigmented halos, conidia of the sensitive fungi did not germinate, and their hyphae did not grow and frequently lysed at the tips. Supplementation of the medium with iron reduced the size of the halos and the inhibition zones, while it increased the pigment accumulation by the colonies. The iron-binding agent tropolone had a similar effect, so I hypothesize that pigmented Metschnikowia isolates inhibit the growth of the sensitive microorganisms by pigment formation, which depletes the free iron in the medium. As the pigment is a large nondiffusible complex produced in the presence of both low and high concentrations of ferric ions, the proposed mechanism is different from the mechanisms operating in microbes that release siderophores into the environment for iron acquisition.