Rhizobacteria are used as inoculants to enhance crop yield and for biological control of fungal pathogens. Fluorescent pseudomonads isolated from the rhizosphere of groundnut showed suppression of the phytopathogen Macrophomina phaseolina that causes charcoal rot of groundnut, an economically important agroproduct. Two strains of fluorescent pseudomonads, designated as PS1 and PS2, were selected as a result of in vitro antifungal activity. After 5 days of incubation at 28+/-1 degrees , both PS1 and PS2 caused clear inhibition zones in dual cultures, restricting the growth of M. phaseolina by 71% and 74%, respectively. Both the strains were capable of producing siderophores, indole acetic acid, and hydrocyanic acid, and causing phosphate solubilization under normal growth conditions. These strains, when used as inoculants in groundnut, enhanced germination up to 15% and 30% with subsequent increase in grain yield by 66% and 77%, respectively. Conversely, when the pathogen alone was testeds 57% decrease in yield was recorded. Thus the studies revealed the potential of the two pseudomonads not only as biocontrol agents against M. phaseolina, but also as a good growth promoter for groundnut.