Horizontal transfer of genes is widespread among prokaryotes, but is less common between microorganisms and animals. Here, we present evidence for the presence of a gene encoding functional isopenicillin N synthase, an enzyme in the β-lactam antibiotics biosynthesis pathway, in the genome of the soil-living collembolan species, Folsomia candida (FcIPNS). At present, this gene is only known from bacteria and fungi, as is the capacity to produce β-lactam antibiotics. The FcIPNS gene was located on two genomic contigs, was physically linked to a predicted insect ATP-binding cassette transporter gene, and contained three introns each flanked by eukaryotic splicing recognition sites (GT/AG). Homology searches revealed no similarity between these introns and the FcIPNS regions of bacteria or fungi. All amino acids conserved across bacteria and fungi were also conserved in F. candida. Recombinant FcIPNS was able to convert its substrate amino δ-(l-α-aminoadipyl)-l-cysteinyl-d-valine into isopenicillin N, providing strong evidence that FcIPNS is functional. Phylogenetic analysis clustered FcIPNS outside the bacterial IPNS clade, and also outside the fungal IPNS clade, suggesting an ancient gene transfer followed by divergence in the F. candida genome. In conclusion, the data suggest that the soil-living collembolan F. candida has assimilated the capacity for antibacterial activity by horizontal gene transfer, which may be an important adaptive trait in the microbe-dominated soil ecosystem.