Lipopeptides from Bacillus species exhibit promising biological control activity against plant pathogens. This study aimed to explore the potential of purified fengycin to induce systemic resistance in tomato against Sclerotinia sclerotiorum. Bacillus amyloliquefaciens FZB42, its mutant AK1S, and their corresponding metabolites showed in vitro inhibition of S. sclerotiorum mycelium. Fengycin derived from an AK1S mutant was purified and identified through HPLC and MALDI-TOF-MS, respectively. Scanning electron microscopy (SEM) and transmission electron microscopy (TEM) revealed structural deformities in the fungal mycelium. Moreover, fengycin induced the accumulation of reactive oxygen species (ROS) in S. sclerotiorum mycelium and downregulated the expression of ROS-scavenging genes viz., superoxide dismutase (SsSOD1), peroxidase (SsPO), and catalase (SsCAT1) compared to the untreated control. Furthermore, the lesion size was dramatically reduced in fengycin-treated tomato plants compared to plants infected with S. sclerotiorum only in a greenhouse experiment. Additionally, the transcriptional regulation of defense-related genes GST, SOD, PAL, HMGR, and MPK3 showed the highest upsurge in expression at 48 h post-inoculation (hpi). However, their expression was subsequently decreased at 96 hpi in fengycin + S. sclerotiorum treatment compared to the plants treated with fengycin only. Conversely, the expression of PPO increased in a linear manner up to 96 hpi.