The present study evaluated the fumigant effect and potential mechanisms of Chinese prickly ash seed kernel (PSK) against tobacco black shank caused by Phytophthora nicotianae Breda de Haan. The results showed that PSK fumigant increased the soil organic matter, hydrolysable nitrogen, available potassium, and total phosphorus significantly, while the pH was decreased. Application of 2% PSK promoted plant growth, with higher plant height, root length, and dry weight compared to those in the treatment with no PSK. Both in vitro and in vivo tests indicated that PSK fumigant effectively inhibited mycelial growth of P. nicotianae, and significantly reduced the severity of tobacco black shank. Based on the analysis of volatiles in PSK by headspace solid-phase microextraction (HS-SPME) gas chromatography-mass spectrometry (GC-MS), 28 components were identified, among which monoterpenes were the major components (accounting for 79.46% of peak area). Among the six top components, linalool, piperitone, sabinene, and limonene exhibited strong mycelial inhibition of P. nicotianae. Linalool was the most effective with an IC50 value of 18.03 μL/L. Results of GC-MS revealed that the main components of PSK extract were cis-Vaccenic acid (40.81%), n-Hexadecanoic acid (15.67%), 9,12-Octadecadienoic acid (Z,Z)- (15.25%), Ethanone-1-(2-hydroxy-4,6-dimethoxyphenyl)- (10.32%), cis-9-Hexadecenoic acid (6.21%), and Psilocin (11.75%). Among them, Ethanone-1-(2-hydroxy-4,6-dimethoxyphenyl)- and 9,12-Octadecadienoic acid (Z,Z)- have an obvious inhibitory effect on P. nicotianae. Additionally, changes in soil bacterial and fungal communities were observed. The relative abundance of some microbes, such as Pseudomonas, Azospirillum, Thermomonas, Glutamicibacter, Dyella, and Trichoderma, increased, which have many beneficial microbes in these genera, indicating that microbial community shift could be one of the important outcomes of the PSK fumigant effect. In conclusion, PSK could be a new bio-fumigation material against plant soilborne pathogens, which can function as both a fungicide and fertilizer.