Escherichia coli O157:H7 is considered among the most important recently emerged food-borne bacteria causing severe hemorrhagic diarrhea. Antibiotic treatment is not recommended as a prospective curative agent against this pathogen. Therefore, potency assessment of the local lytic phage isolates infecting E. coli O157:H7 as an alternate remedy to antibiotics was the principal concern of this study. Phage isolates against E. coli O157:H7 were checked by polymerase chain reaction for the presence of the virulence genes stx1 and stx2, and the safe phages were further screened in vitro for their capacity as biocontrol agents. Two bacteriophage strains, namely PAH6 and P2BH2, that had expressed potential antibacterial activity (P < 0.05) in vitro were selected for in vivo testing in ligated rabbit ileal loop models. Both phage isolates were capable of decreasing fluid accumulation in rabbit ileal loops along with reducing bacterial growth (r = 0.992). Combined application of the phages was found most satisfactory, reducing seven log cycles of bacterial growth. Consistent results in both in vivo and in vitro experiments demonstrate the applicability of bacteriophages as a rapid response tool against E. coli O157:H7. To our knowledge, this is the first successful application of the rabbit ileal loop test for therapeutic evaluation of bacteriophages.