Aim: Isolation and characterization of a bacterial isolate (strain FP10) from banana rhizosphere with innate potential as fungal antagonist and microbial adjuvant in micropropagation of banana. Methods and Results: Bacterium FP10 was isolated from the banana rhizosphere and identified as Pseudomonas aeruginosa based on phenotypic, biochemical traits and sequence homology of partial 622-bp fragment of 16S ribosomal DNA (rDNA) amplicon, with the ribosomal database sequences. Strain FP10 displayed antibiosis towards fungi causing wilt and root necrosis diseases of banana. Production of plant growth hormone, indole-3-acetic acid (IAA), siderophores and phosphate-solubilizing enzyme in FP10 was determined. Strain FP10 tested negative for hydrogen cyanide, cellulase and pectinase, the deleterious traits for plant growth. Screening of antibiotic genes was carried out by polymerase chain reaction using gene-specific primers. Amplification of a 745-bp DNA fragment confirmed the presence of phlD, which is a key gene involved in the biosynthesis of 2,4-diacetylphloroglucinol (DAPG) in FP10. The antibiotic produced by FP10 was confirmed as DAPG using thin layer chromatography, high performance liquid chromatography and Fourier transform infrared and tested for fungal antibiosis towards banana pathogens. Procedures for encapsulation of banana shoot tips with FP10 are described. Conclusions: Strain FP10 exhibited broad-spectrum antibiosis towards banana fungi causing wilt and root necrosis. DAPG by FP10 induced bulb formation and lysis of fungal mycelia. Encapsulation of banana shoot tips with FP10 induced higher frequency of germination (plantlet development) than nontreated controls on Murashige and Skoog basal medium. Treatment of banana plants with FP10 enhanced plant height and reduced the vascular discolouration as a result of Fusarium oxysporum f. sp. cubcnse FOC. Significance and Impact of the Study: Because of the innate potential of fungal antibiosis by DAPG antibiotic and production of siderophore, plant-growth-promoting IAA and phosphatase, the strain FP10 can be used as biofertilizer as well as a biocontrol agent.