Endophytes play important roles in promoting plant growth and controlling plant diseases. Verticillium wilt is a vascular wilt disease caused by Verticillium dahliae, a widely distributed soilborne pathogen that causes significant economic losses on cotton each year. In this study, an endophyte KRS015, isolated from the seed of Verticillium wilt-resistant Gossypium hirsutum cultivar "Zhongzhimian No. 2", was identified as Bacillus subtilis by morphological, phylogenetic, physiological and biochemical analyses. The volatile organic compounds (VOCs) produced by KRS015 or its cell-free fermentation extract had significant antagonistic effects on various pathogenic fungi including V. dahliae. KRS015 reduced Verticillium wilt index and colonization of V. dahliae in treated cotton seedlings significantly, and the disease reduction rate was ~62%. KRS015 also promoted plant growth, potentially mediated by cotton growth-related genes, GhACL5 and GhCPD-3. The cell-free fermentation extract of KRS015 triggered hypersensitivity response, including reactive oxygen species (ROS) and expression of plant resistance-related genes. VOCs from KRS015 also inhibited germination of conidia and the mycelial growth of V. dahliae, and were by mediated growth and development-related genes such as VdHapX, VdMcm1, Vdpf and Vel1. These results suggest that KRS015 is a potential agent for controlling Verticillium wilt and promoting growth of cotton.