Controlling agricultural pests using suitable biocontrol agents has been considered the best strategy for sustainable agriculture. Charcoal rot caused by a necrotrophic fungus Macrophomina phaseolina is responsible for a 30–50% annual reduction in soybean yield worldwide. Little is known about the role of Bacillus clausii in reducing charcoal rot disease severity in the soybean crop. In this study, we investigated plant growth promoting and antagonistic potential of Pseudomonas putida (MT604992) and Bacillus clausii (MT604989) against charcoal rot disease incidence in soybean. Among twenty bacteria isolated from soil and water samples of two different hot springs of Gilgit-Baltistan, Pakistan, 80% were siderophore positive; 65% were hydrogen cyanide (HCN) positive; 55%, 30%, and 75% were phosphate, potassium, and zinc solubilizers, respectively. Based on higher antagonistic activities and plant growth promoting traits five strains were selected for in vitro screening. Out of all tested strains, Pseudomonas putida and Bacillus clausii showed a significant increase in germination, growth, and disease suppression in soybean. These strains produced a pronounced increase in relative water content, photosynthetic pigments, membrane stability, proline, antioxidant enzymes status, phytohormones content (Salicylic acid, and Jasmonic acid), and disease suppression in comparison to control plants. Bacillus clausii mitigated the disease by 97% with a marked increase in the proline content (73% and 89%), superoxide dismutase (356% and 208%), peroxidase (439% and 138.6%), catalase (255.8% and 80.8%), and ascorbate peroxidase (228% and 90%) activities in shoots and roots, respectively. Infected plants showed an increase in salicylic acid and jasmonic acid content which was further increased with the application of the selected strains to increase resistance against pathogens. To our knowledge, this is the first study showing a rise in salicylic acid and jasmonic acid in Macrophomina phaseolina infected plants. These two strains are suggested as a cost-effective, eco-friendly, and sustainable alternative to chemical fungicides. However, there is a need to explore the field testing and molecular mechanisms leading to disease suppression by these strains.