Bacillus thuringiensis produces crystals of toxin that are lethal to larval stages (caterpillars) of the insects which belong to orders Coleoptera, Lepidoptera and Diptera, but are considered harmless to most other organisms, including humans. The spores of the bacterium and the toxic crystals that are produced in the bacterial plasmids are used in crop protection.

Cry toxins have specific activities against insect species of the orders Lepidoptera (moths and butterflies), Diptera (flies and mosquitoes), Coleoptera (beetles), Hymenoptera (wasps, bees, ants and sawflies) and nematodes. Thus, B. thuringiensis serves as an important reservoir of Cry toxins for production of biological insecticides and insect-resistant genetically modified crops.

When insects ingest toxin crystals, the alkaline pH of their digestive tract denatures the insoluble crystals, making them soluble and thus amenable to being cut with proteases found in the insect gut, which liberate the cry toxin from the crystal. The Cry toxin is then inserted into the insect gut cell membrane, forming a pore. The pore results in cell lysis and eventual death of the insect.

Bacillus thurigiensis-based insecticides are often applied as liquid sprays on crop plants, where the insecticide must be ingested to be effective. The gene encoding the Bt toxin is commonly used in modern biotechnology to introduce the resistance to crop plants, such as maize and cotton.