Plants encounter many biotic entities, such as fungi, bacteria, and nematodes, which induce biotic stress that disrupts normal metabolism and limits the growth and productivity of plants. Currently, the use of plant growth-promoting bacterial endophytes instead of synthetic fungicides is intriguingly eco-friendly. An in vitro and in vivo antagonistic approach using Bacillus amyloliquefaciens RaSh1 was used to mimic the pathogenic effect of Alternaria alternata. The results showed that B. amyloliquefaciens significantly inhibited pathogenic fungal growth in vitro. Further, Capsicum annuum L. (pepper plants) were grown and subjected to inoculation with B. amyloliquefaciens and infected with A. alternata, and then the growth attributes, photosynthetic pigments, physio-biochemical parameters, and the level of endogenous phytohormones were assessed. Under the pathogen attack, the main responses, such as plant length, total fresh and dry weights, total chlorophylls, and pigments, were reduced, accompanied by increases in H2O2. As well, infection of pepper with A. alternata caused downregulation in the plant hormonal system by significantly decreasing gibberellins, indole-3-acetic acid, abscisic acid, as well as cytokinin concentrations. Although, with B. amyloliquefaciens application, an enhancement in growth, photosynthetic pigments, proline, thiol content, phenylalanine ammonia-lyase, and peroxidase in pepper plant leaves appeared while the content of H2O2 decreased. Endogenous phytohormones were found to be upregulated in B. amyloliquefaciens-inoculated and diseased plants. The current study found that B. amyloliquefaciens RaSh1 rescued pepper plant growth by modulating antioxidant defense and regulating hormones, and could be used to control A. alternata in an environmentally friendly manner while maintaining sustainable agriculture and food security.