A bacterial strain (WM-37) was isolated from soil and identified as Streptomyces rectiviolaceus on the basis of morphological, physiological, biochemical, and 16S rRNA characteristics. The strain was screened regarding its potential use for controlling the pathogen causing peony southern blight. To enhance the secondary metabolite yield, submerged fermentation was conducted according to a single-factor trial and response surface method. Metabolite production peaked under the following conditions: 250.00 mL flask containing 100.00 mL culture medium consisting of 20.00 g·L−1 soluble starch, 3.86 g·L−1 ammonium sulfate, 0.50 g·L−1 sodium chloride, 0.50 g·L−1 dipotassium phosphate, 0.50 g·L−1 magnesium sulfate, and 0.01 g·L−1 ferrous sulfate; inoculation amount, 7.74%; temperature, 30 °C; initial pH, 7.00; incubation time, 7 days; and rotational speed, 160 rpm. The fermentation broth was absorbed by D101 macroporous resin and eluted with an ethanol-water gradient, after which the eluate fractions with antifungal compounds were collected, evaporated, and concentrated to obtain a crude extract. This extract was dissolved in methanol and separated by high-performance liquid chromatography. The active compound was identified as azelaic acid (C9H16O4) on the basis of ultra-high-resolution mass spectrometry and analyses of publicly available data. These findings suggest that Streptomyces rectiviolaceus WM-37 may be a viable biocontrol agent effective against the pathogen responsible for peony southern blight.