Globally, drought stress poses a significant threat to crop productivity. Improving the drought tolerance of crops with microbial biostimulants is a sustainable strategy to meet a growing population’s demands. This research aimed to elucidate microbial biostimulants’ (Plant Growth Promoting Rhizobacteria) role in alleviating drought stress in oil-seed crops. In total, 15 bacterial isolates were selected for drought tolerance and screened for plant growth-promoting (PGP) attributes like phosphate solubilization and production of indole-3-acetic acid, siderophore, hydrogen cyanide, ammonia, and exopolysaccharide. This research describes two PGPR strains: Acinetobacter calcoaceticus AC06 and Bacillus amyloliquefaciens BA01. The present study demonstrated that these strains (AC06 and BA01) produced abundant osmolytes under osmotic stress, including proline (2.21 and 1.75 µg ml− 1), salicylic acid (18.59 and 14.21 µg ml− 1), trehalose (28.35 and 22.74 µg mg− 1 FW) and glycine betaine (11.35 and 7.74 mg g− 1) respectively. AC06 and BA01 strains were further evaluated for their multifunctional performance by inoculating in Arachis hypogaea L. (Groundnut) under mild and severe drought regimes (60 and 40% Field Capacity). Inoculation with microbial biostimulants displayed distinct osmotic-adjustment abilities of the groundnut, such as growth parameters, plant biomass, photosynthetic pigments, relative water content, proline, and soluble sugar in respective to control during drought. On the other hand, plant sensitivity indexes such as electrolyte leakage and malondialdehyde (MDA) contents were decreased as well as cooperatively conferred plant drought tolerance by induced alterations in stress indicators such as catalase (CAT), ascorbate peroxidase (APX), and superoxide dismutase (SOD). Thus, Acinetobacter sp. AC06 and Bacillus sp. BA01 can be considered as osmolyte producing microbial biostimulants to simultaneously induce osmotic tolerance and metabolic changes in groundnuts under drought stress.