Chemical pesticides are widely used in agriculture, which endangers both environmental health and food safety. Biocontrol is an environmentally-friendly and cost-effective green technique in environmental protection and agricultural production; it generally uses selected bioresources, including beneficial microorganisms. We isolated a novel bacterial strain (NKG-1) from the rare dormant volcanic soils of Changbai Mountain in China’s Jilin Province. The strain was identified as Bacillus methylotrophicus using morphological, biochemical, physiological, and phylogenetic 16S rDNA sequencing data. This strain was able to suppress mycelial growth and conidial germination of numerous plant pathogenic fungi on solid media. A greenhouse experiment showed that application of NKG-1 fermentation broth prior to inoculation of Botrytis cinerea, the cause of gray tomato mold, inhibited growth of the mold by 60%. Furthermore, application of a 100× dilution of NKG-1 fermentation broth to tomato seedlings yielded a significant increase in seedling fresh weight (27.4%), seedling length (12.5%), and root length (57.7%) compared to the control. When the same dosage was applied in the field, we observed increases in tomato plant height (14.7%), stem diameter (12.7%), crown width (16.3%), and maximum fruit diameter (11.5%). These results suggest that NKG-1 has potential commercial application as a biofertilizer or biocontrol agent.