Spent coffee grounds (SCGs), one of the world’s most discarded wastes, may be an excellent resource as an organic fertilizer because of its richness in nutrients. The objective of this study was to develop a quality functional compost using SCGs, rice bran, biochar, SCG extract, and functional microbes (plant growth promoting and plant pathogen-suppression bacteria), and then to test their functional efficacy for a potential commercial application. Essentially, two types of representative composts (Tr_1 and Tr_5 on the laboratory and pilot scale, respectively) were developed and passed all the official commercial quality standards. For pilot-scale composting, populations of Halotalea_uc, Corynebacterium nuruki, and Lactobacillus acidipiscis increased by augmentation of the composting microbes (MA-1) and the functional microbes (Bacillus cereus SB-3, Bacillus toyonensis SB-4, and Streptomyces sasae St-3). The higher total flavonoid content (11% increase compared to control) of pepper leaves in PT-1 and the higher TEAC in PT-1 (36.2%) and PT-2 (32.5%) proved the efficacy of the functional composts bioaugmented with the functional microbes. The seedling growth of radish seeds treated with Streptomyces sasae St-3 as a biocontrol agent significantly increased despite the presence of the pathogen Fusarium oxysporum f. sp. lactucae. The total phenol content and TEAC in pepper plant leaves were significantly higher in Tr_5 than in the control (Tr_4), whereas there were no differences in Tr_4 and Tr_5 infested with the fungal pathogens, indicating that SB-3, SB-4, and St-3 cultures amended within the compost (Tr_5) may facilitate the production of the antioxidants in the absence of the pathogens. However, a significant reduction in the antioxidants (total phenolic content and TEAC) was observed in the pepper plants whose roots were infected with the pathogens, indicating that the pathogens could neutralize functionalities of the functional microbes. It was concluded that the enhancement of functional microbes in the compost would aid in the biological control of pathogens in the soil environment. Further functional compost studies are necessary in terms of mechanisms of plant growth-promotion, mechanisms of pathogen suppression by the actinobacterial biocontrol agents, and interactions between the two mechanisms, as well as quality enhancement of the composts.