Invertebrates, including insects, are being developed as model systems for the study of bacterial virulence. However, we understand little of the interaction between bacteria and specific invertebrate tissues or the immune system. To establish an infection model for Photorhabdus, which is released directly into the insect blood system by its nematode symbiont, we document the number and location of recoverable bacteria found during infection of Manduca sexta. After injection into the insect larva, P. luminescens multiplies in both the midgut and haemolymph, only later colonizing the fat body and the remaining tissues of the cadaver. Bacteria persist by suppressing haemocyte-mediated phagocytosis and culture supernatants grown in vitro, as well as plasma from infected insects, suppress phagocytosis of P. luminescens. Using GFP-labelled bacteria, we show that colonization of the gut begins at the anterior of the midgut and proceeds posteriorly. Within the midgut, P. luminescens occupies a specific niche between the extracellular matrix and basal membrane (lamina) of the folded midgut epithelium. Here, the bacteria express the gut-active Toxin complex A (Tca) and an RTX-like metalloprotease PrtA. This close association of the bacteria with the gut, and the production of toxins and protease, triggers a massive programmed cell death of the midgut epithelium.