Loss-of-function alleles of the mildew resistance locus O (MLO) gene provide broad-spectrum powdery mildew disease resistance. Here, we identified a pepper (Capsicum annuum) MLO gene (CaMLO2) that is transcriptionally induced by Xanthomonas campestris pv. vesicatoria (Xcv) infection. Topology and subcellular localization analyses reveal that CaMLO2 is a plasma membrane-anchored and amphiphilic Ca2+-dependent calmodulin-binding protein. CaMLO2 expression is up-regulated by Xcv and salicylic acid, as well as abiotic stresses. Silencing of CaMLO2 in pepper plants confers enhanced resistance against virulent Xcv, but not against avirulent Xcv. This resistance is accompanied by a compromised susceptibility cell-death response and reduced bacterial growth, as well as an accelerated reactive oxygen species burst. Virulent Xcv infection drastically induces expression of the salicylic acid-dependent defense marker gene CaPR1 in CaMLO2-silenced leaves. CaMLO2 over-expression in Arabidopsis enhances susceptibility to Pseudomonas syringae pv. tomato and Hyaloperonospora arabidopsidis. Leaves of plants over-expressing CaMLO2 exhibit a susceptibility cell-death response and high bacterial growth during virulent Pst DC3000 infection. These are accompanied by enhanced electrolyte leakage but compromised induction of some defense response genes and the reactive oxygen species. Together, our results suggest that CaMLO2 is involved in the susceptibility cell-death response and bacterial and oomycete proliferation in pepper and Arabidopsis.