Background Stem rot caused by Sclerotium rolfsii Sacc. is a major nuisance in groundnut production, causing substantial yield losses in almost all groundnut-growing areas around the world. Biological control is regarded as a sustainable choice over the currently popular management strategy i.e., chemical control, as later has a negative influence on the environment. The present study evaluated the antagonistic effect of native rhizosphere micro-flora against groundnut stem rot pathogen S. rolfsii. Results A total of 111 bacterial isolates and 9 Trichoderma isolates isolated from groundnut rhizosphere soil were evaluated for their antagonist activity against S. rolfsii in vitro. Eight isolates (seven bacterial and one Trichoderma) were chosen as prospective biocontrol candidates based on the findings of the dual culture assay. Molecular characterization of these isolates by 16S rDNA and ITS rDNA sequencing confirmed the identity of bacterial isolates as Bacillus spp. (six B. subtilis and one B. amyloliquefaciens) and fungal isolate as Trichoderma asperellum. Also, the selected seven bacterial isolates recorded favourable results for antagonism-promoting biochemical traits. Conclusion The results of the current study suggested that the native groundnut rhizosphere micro-flora can be exploited for biological control of groundnut stem rot pathogen S. rolfsii. Further research may enable the use of the isolated rhizosphere biocontrol agents as single organisms or in a consortium for sustainable management of the groundnut stem rot pathogen.