An investigation into the bioactive metabolites from a benthic, mat-forming strain dominating a polluted wastewater canal in Egypt was conducted. Phytochemical screening revealed the presence of saponins, flavonoids and alkaloids; vitamin C was also found at high concentrations. The isolate was investigated as a source of antimicrobial compounds. The lipophilic fraction was extracted using chloroform/methanol and bioassays for antimicrobial compounds were performed using strains of pathogenic bacteria. The fraction that showed the highest bioactivity was purified and its structure elucidated using UV, FTIR, proton-NMR and GC-MS. The compound's molecular weight was 220 and it was identified as butylated hydroxytoluene which has both antimicrobial and antioxidant activities. On the ecological front, this compound, and the other metabolites detected, seem to enable the isolate to dominate its niche and protect it from adverse conditions. On the commercial front, this compound is used as a food additive and was recently discovered in different cyanobacteria, and can be used as a lead compound for both drug and food industries to substitute for the expensive and hazardous synthetic analogs. Therefore, this strain can be considered as a potential source of bioactive compounds that should be further explored.