This study investigated the effects of dietary Paenibacillus xylanexedens ysm1 supplementation on growth performance, intestinal morphology, immune response, and cecal microbiota of broiler chickens challenged with Escherichia coli K88. A total of 320 one-day-old male broiler chicks were randomly allocated to 4 treatments (8 floor pens, 10 birds/pen) including 1) negative control (NC) birds fed a basal diet and not challenged with E. coli K88; 2) positive control (PC) birds fed a basal diet and challenged with of E. coli K88; 3) P. xylanexedens ysm1 treatment (PRO) birds fed a basal diet supplemented with 1 x 10(9) P. xylanexedens ysm1 cfu/kg feed and challenged with E. coli K88; and 4) antibiotic treatment (ANT) birds fed a basal diet supplemented with 20 mg of colistin sulphate/kg of feed and challenged with E. coli K88. The E. coli challenge decreased (P < 0.05) BWG in PC birds compared with the ANT birds on days 21 and 28. The FCR was higher (P < 0.01) in PC birds compared with the NC, PRO, and ANT birds on days 14, 21, and 28. Compared with the NC, PRO, and ANT birds on day 28, PC birds had shorter villi and higher number of goblet cells in both jejunum and ileum (P < 0.001). Irrespective of the dietary treatments, the E. coli challenge reduced the number of PCNA-positive cells in both the jejunum and ileum on day 28. Paenibacillus xylanexedens ysm1 treatment resulted in higher concentration of mucosal sIgA in the jejunum as compared to the other treatment groups on days 14 and 28. The numbers of cecal E. coli were reduced (P = 0.017) in broilers treated with P. xylanexedens ysm1 or antibiotic in comparison with the PC group on day 28. In conclusion, the present study demonstrated that dietary supplementation of this new probiotic bacteria P. xylanexedens ysm1 improved broiler performance by modulating intestinal morphology, enhancing immune response, and reducing the number of E. coli in the cecum.