Chinese medicinal plants and their surrounding rhizospheric soil serve as promising sources of actinobacteria. A total of 180 actinobacteria strains were isolated from the rhizosphere soil, leaves, stems, and roots of nine selected plants and have been identified as potential biocontrol agents against Fusarium oxysporum f. sp. cucumerinum. An endophytic strain CNS-42 isolated from Alisma orientale showed the largest zone of inhibition demonstrating a potent effect against F. oxysporum f. sp. cucumerinum and a broad antimicrobial activity against bacteria, yeasts, and other pathogenic fungi. The in vivo biocontrol assays showed that the disease severity index was significantly reduced (P < 0.05), and plant shoot fresh weight and height increased greatly (P < 0.05) in plantlets treated with strain CNS-42 compared to the negative control. This isolate was identified as Streptomyces sp. based on cultural, physiological, morphological characteristics, and 16S rRNA gene analysis. Further bioassay-guided isolation and purification revealed that staurosporine was responsible for its antifungal and plant growth promoting activities and the latter property of staurosporine is reported for the first time. The in vivo assay was further performed and indicated that staurosporine showed good growth promoting effect on the plant shoot biomass of cucumber. This is the first critical evidence identifying CNS-42 as a biocontrol agent for the soil borne pathogen, F. oxysporum f. sp. cucumerinum.