Serendipita indica, a multifunctional and useful endophyte fungus, has been intensively investigated in promoting plant growth and resistance towards biotic and abiotic stress. Multiple chitinases from microorganisms or plants have been identified to have a high antifungal activity as a biological control.However, chitinase of S. indica still needs to be characterized. We functionally characterized a chitinase (SiChi) in S. indica. The result showed that the purified SiChi protein confers high chitinase activity; importantly, SiChi inhibits the conidial germination of Magnaporthe oryzae and Fusarium moniliforme. After the successful colonization of rice roots by S. indica, both the rice blast disease and bakanae disease were significantly reduced. Interestingly, the purified SiChi could promptly induce rice disease resistance towards M. oryzae and F. moniliforme pathogens when sprayed on rice leaves. Like S. indica, SiChi could upregulate rice pathogen-resistant proteins and defense enzymes. In conclusion, chitinase of S. indica has direct antifungal activity and indirect induced resistance activity, implying an efficient and economic strategy for rice disease control by applying S. indica and SiChi.