A novel co-culture method using the beneficial root endophytic fungus Piriformospora indica and a plant-growth promoting rhizobacterial strain of Bacillus pumilus to promote the growth of tomato seedlings in plug trays, is described. Coconut water, a waste product from the coconut industry, was used as medium for co-cultivation of the two biological agents. During the co-culture with the fungus, the bacterial strain showed a similar growth rate to that in monoculture in fresh autoclaved coconut water. In contrast, co-culture in potato dextrose broth (PDB), a medium routinely used for cultivation of the endophytic fungus, did not support bacterial growth. Inoculation with the co-culture or a mixture of P. indica and B. pumilus promoted tomato seedling growth significantly when compared with individual application of the two biological agents. No difference was observed with respect to the degree of root colonization in tomato seedlings whether it was done with a monoculture or a co-culture with rhizobacterium. The co-culture system developed reduces the cost of inoculum production as it uses coconut water, a cheap and locally available waste product and a single fermentation vessel. Further research is required to know the endophytic nature of the rhizobacterial strain and its possible role in helping the fungus in root colonization.