The sheath blight disease of rice caused by Rhizoctonia solani is widely prevalent and one of the most destructive diseases, affecting rice cultivation and loss worldwide. In the present study, a set of twenty Bacillus isolates from saline soil of Uttar Pradesh were tested for their biocontrol activity against R. solani with the aim to obtain a potential strain for the control of sheath blight disease toward ecofriendly and sustainable agriculture. The results of dual‐culture assay and scanning electron microscopic studies showed that the strain RH5 exhibited significant antagonistic activity (84.41%) against the fungal pathogen R. solani. On the basis of 16S rDNA sequencing analysis, the potential biocontrol strain RH5 was identified as Bacillus subtilis. Furthermore, the strain RH5 was characterized by different plant growth‐promoting (PGP) activities and induction of defense‐related enzymes in rice plants against R. solani. The strain RH5 posses various PGP attributes (indole acetic acid, siderophore, hydrogen cyanide production and phosphate, Zn, K solubility), hydrolytic enzymatic (chitinase, protease, cellulase, xylanase) activity, and presence of antimicrobial peptide biosynthetic genes (bacylisin, surfactin, and fengycin), which support the strain for efficient colonization of hyphae and its inhibition. Finally, the results of the greenhouse study confirmed that strain RH5 significantly increased plant growth and triggered resistance in rice plants through the production of defense‐related antioxidant enzymes.