A plant growth promotory bacterial strain, isolated from the potato rhizosphere, was characterized as Pseudomonas aeruginosa (GRC1). The isolate produced an hydroxamate type of siderophore after 48 h of incubation on tryptic soy medium under iron deficient conditions. The in vitro antifungal activity of P. aeruginosa was tested against two soil-borne plant pathogens, Macrophomina phaseolina and Fusarium oxysporum. The antagonistic behaviour of the isolate was tested by dual culture technique. The growth inhibition of M. phaseolina and F. oxysporum was 74.1% and 70.5%, respectively, after 5 days of incubation. The production of hydrocyanic acid and indole acetic acid was also recorded under normal growth conditions.