Aflatoxin contamination is a qualitative problem in groundnut (Arachis hypogaea L.) occurring at both pre-and post-harvest stages. These aflatoxins are secondary metabolites produced by Aspergillus flavus and A. parasiticus and have carcinogenic, hepatotoxic, teratogenic and immuno-suppressive effects. Use of plant growth-promoting rhizobacteria (PGPR) is a viable and sustainable option in managing aflatoxin problem in groundnut. Our present study is aimed at identifying a plant growth-promoting rhizobacteria (PGPR) strain with superior antagonistic abilities on A. flavus infection, aflatoxin contamination and to determine its mode of action. Ten native P. fluorescens isolates were isolated from groundnut rhizosphere and screened against A. flavus by dual culture and in vitro seed colonization (IVSC) assays. In dual culture and IVSC studies, Pf7 exhibited higher degree of antagonism on A. flavus (54% inhibition), inhibited its colonization and reduced aflatoxin contamination (27.8 µg kg-1) in kernels.