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Application of plant growth‐promoting rhizobacteria (PGPR) has been considered as an environmentally friendly method for crop yield promotion as well as plant disease management. Efforts have been devoted to unraveling mechanisms involved in bacteria–plant and bacteria–pathogen interactions. However, little is known on the effect of the interaction among PGPR, soil, and plant. We compared growth and yield promotion capacity of biofertilizer Ning Shield, a consortium of bacterial preparation used as a biofertilizer (BF), and its mixture with compost of agricultural waste including spent substrate of Pleurotus ostreatus (SSP)/Volvariella volvacea (SSV), chicken manure (CM), and inorganic fertilizer (IOF) in a pepper field, respectively. The disease control efficacy, pepper fruit preservation time, and nutrients were also determined. Soil nutrient parameters including organic matter and available NPK of treatments were assayed before and after one growth season. All of the mixture of BF+organic compost treatment significantly enhanced the yield and quality of pepper fruit. Moreover, disease control capacity was promoted by the mixture of BF+organic compost, with BF+SSV reaching the highest control efficacy of 81% on 60th day after transplanting, and remaining 76% at the 105th day. The BF+SSV treatment showed soil fertility retention ability with higher soil nutrient contents after one growth season of pepper. This study provides evidence that, when combined with organic fertilizers such as spent mushroom substrate compost, beneficial microbes have the ability to promote plant growth and yield as well as suppress plant disease by sustaining soil fertility through complex bacteria–soil–plant interaction. [ABSTRACT FROM AUTHOR]