Xenorhabdus nematophila secretes insecticidal proteins to kill its larval prey. We have isolated a ~58 kDa GroEL homolog, secreted in the culture medium through outer membrane vesicles. The protein was orally insecticidal to a major crop pest Helicoverpa armigera with LC50 ~3.6 µg/g diet. For optimal insecticidal activity all the three domains of the protein- apical, intermediate and equatorial were necessary. The apical domain alone was able to bind to the larval gut membranes and manifest low-level insecticidal activity. At equimolar concentrations, the apical domain contained ~1/3 and apical-intermediate domain, ~1/2 bioactivity of the full-length protein. Interaction of the protein with the larval gut membrane was specifically inhibited by N-acetyl glucosamine and chito-oligosaccharides. Treatment of the larval gut membranes with chitinase abolished protein binding. Based on the 3D structural model, mutational analysis demonstrated that surface exposed residues T347 and S356 in the apical domain were crucial for both, binding to the gut epithelium and insecticidal activity. A double mutant T347A, S356A was 80% less toxic (P<0.001) than the wild type protein. The GroEL homolog showed a-chitin binding activity with Kd ~0.64 µM and Bmax ~4.68 µmol/gram chitin. The variation in chitin binding activity of the mutant proteins was in good agreement with membrane binding characteristics and insecticidal activity. The less toxic double mutant XnGroEL showed ~8 fold increase of Kd in chitin binding assay. Our results demonstrate that X. nematophila secretes an insecticidal GroEL protein with chitin binding activity.