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Rhizosphere bacteria can positively influence plant growth by direct and indirect mechanisms. A total of 112 bacterial strains were isolated from the rhizosphere of rice and tested for plant beneficial activities such as siderophore production, cell-wall-degrading enzyme production, hydrogen cyanide (HCN) production and antifungal activity against rice blast disease fungus. The actinomycetes count was 3.8 &#215; 10⁶ CFU/g soil. <i>Streptomyces</i> strains PC 12, D 4.1, D 4.3 and W1 showed strong growth inhibition of blast disease fungus, <i>Pyricularia</i> sp. (87.3%, 82.2%, 80.0% and 80.5%) in vitro. Greenhouse experiments revealed that rice plants treated with <i>Streptomyces</i> strain PC 12 recorded maximum plant height, root length and root dry weight compared to the control. Taxonomic characterization of this strain on the basis of 16S rRNA gene sequence led to its identification as <i>Streptomyces palmae</i> PC 12. <i>Streptomyces palmae</i> PC 12 may be used as biofertilizer to enhance the growth and productivity of commercially important rice cultivar RD6 and the biocontrol of blast disease fungus.