Biochar, in addition to sequestering carbon, ameliorating soil, and improving plant performance, can impact foliar and soilborne plant diseases. Nevertheless, the mechanisms associated with suppression of soilborne diseases and improved plant performances are not well understood. This study is designed to establish the relationships between biochar-induced changes in rhizosphere microbial community structure, taxonomic and functional diversity, and activity with soilborne disease suppression and enhanced plant performance in a comprehensive fashion. Biochar suppressed Fusarium crown and root-rot of tomato and simultaneously improved tomato plant growth and physiological parameters. Furthermore, biochar reduced Fusarium root colonization and survival in soil, and increased the culturable counts of several biocontrol and plant growth promoting microorganisms. Illumina sequencing analyses of 16S rRNA gene revealed substantial differences in rhizosphere bacterial taxonomical composition between biochar-amended and non-amended treatments. Moreover, biochar amendment caused a significant increase in microbial taxonomic and functional diversity, microbial activities and an overall shift in carbon-source utilization. High microbial taxonomic and functional diversity and activity in the rhizosphere has been previously associated with suppression of diseases caused by soilborne pathogens and with plant growth promotion, and may collectively explain the significant reduction of disease and improvement in plant performance observed in the presence of biochar.