Phytophthora cinnamomi is a harmful microorganism that can infect Cinnamomum plants and cause the rotting of plant roots. It has been reported as infecting nearly 5000 types of plants worldwide, such as avocado trees, macadamia trees, and oak and chestnut trees, and is listed among the 10 most destructive oomycetes and the 100 most severely invasive species globally. A number of chemical agents have been applied in the control of phytophthora rot diseases because of their easy application and rapid effects. However, with the extensive use of chemical agents, P. cinnamomi has developed resistance. More importantly, it has damaged the ecological environment and affected human health. Given that biological control should be safe and effective, the screening of biocontrol strains with highly effective antagonistic effects is regarded as the primary means to control P. cinnamomi. In this study, a bacterial strain was isolated from the soil of healthy rhododendron, located near to diseased rhododendron plants, and identified as Streptomyces araujoniae, named S-03, which inhibited P. cinnamomi. The plate antagonism assay showed that S-03 could effectively bend the hyphae, reduce the number of branches, and even break them, destroying the integrity of the hyphal cell membrane to inhibit the growth of P. cinnamomi. Moreover, strain S-03 also could inhibit the activity of P. cinnamomi cell wall-degrading enzymes. To analyze the inhibitory mechanism of S-03, the effects of cell wall-degrading enzymes, secondary metabolites, and volatile substances produced by S-03 on P. cinnamomi were assessed. It was found that the fermentation broth of S-03 had a strong inhibitory effect on P. cinnamomi which means metabolites play a part in inhibition. The active substance of S-03 was initially separated and purified by ethyl acetate extraction and silica gel column chromatography and had the properties of small molecules, low polarity, and solubility in methanol. The biocontrol effect was detected in the host plants and indicated that S-03 could effectively protect rhododendron from P. cinnamomi infection. Overall, the present study findings provide compelling evidence that Streptomyces S-03 could be a biocontrol agent against plant diseases caused by P. cinnamomi.