Diverse bacterial species possess the ability to produce the auxin phytohormone indole-3-acetic acid (IAA). Different biosynthesis pathways have been identified and redundancy for IAA biosynthesis is widespread among plant-associated bacteria. Interactions between IAA-producing bacteria and plants lead to diverse outcomes on the plant side, varying from pathogenesis to phytostimulation. Reviewing the role of bacterial IAA in different microorganism–plant interactions highlights the fact that bacteria use this phytohormone to interact with plants as part of their colonization strategy, including phytostimulation and circumvention of basal plant defense mechanisms. Moreover, several recent reports indicate that IAA can also be a signaling molecule in bacteria and therefore can have a direct effect on bacterial physiology. This review discusses past and recent data, and emerging views on IAA, a well-known phytohormone, as a microbial metabolic and signaling molecule.