Pseudomonas fluorescens and Bacillus subtilis isolated from rhizosphere of healthy groundnut plants were screened for their antagonistic potential against the crown rot pathogen Aspergillus niger of Arachis hypogaea L. Antagonistic isolates were further challenged for their ability to induce phenolics and lipoxygenase in A.hypogaea seedlings. Maximum accumulation of phenolics (Monophenol - 42 mg g-1 FW; Diphenol - 34 mg g-1 FW; Total phenol - 261 mg g-1 FW) and lipoxygenase (44 Abs mg-1 min-1) occurs in shoots of 30 days old seedlings. GC-MS studies revealed the presence of precursors of hydroperoxides that plays a key role in plant defense mechanism