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Purpose: Plant growth–promoting (PGP) bacteria are an environment-friendly alternative to chemical fertilizers for promoting plant growth and development. We isolated and characterized a PGP endophyte, YSD YN2, from the leaves of Cyperus esculentus L. var. sativus. Methods: Specific PGP characteristics of this strain, such as phosphate solubilization ability, potassium-dissolving ability, siderophore and indole-3-acetic acid (IAA) production, and salt tolerance, were determined in vitro. In addition, positive mutants were screened using the atmospheric and room temperature plasma (ARTP) technology, with IAA level and organic phosphate solubility as indices. Furthermore, the effect of the positive mutant on seed germination, biomass production, and antioxidant abilities of greengrocery seedling was evaluated, and the genome was mined to explore the underlying mechanisms. Results: The strain YSD YN2 showed a good performance of PGP characteristics, such as the production of indole acetic acid and siderophores, solubilization ability of phosphate, and potassium-dissolving ability. It was recognized through 16S rRNA sequencing together with morphological and physiological tests and confirmed as Franconibacter sp. The strain exposed to a mutation time of 125 s by ARTP had the highest IAA and organic phosphate (lecithin) concentrations of 9.25 mg/L and 16.50 mg/L, 50.41% and 30.54% higher than those of the initial strain. Inoculation of mutant strain YSD YN2 significantly increased the seed germination, plant growth attributes, and the activities of peroxidase (POD) and superoxide dismutase (SOD), respectively, but decreased the content of malondialdehyde (MDA) significantly compared with the control. Furthermore, genome annotation and functional analysis were performed through whole-genome sequencing, and PGP-related genes were identified. Conclusion: Our results indicated that the mutant strain YSD YN2 with PGP characteristics is a potential candidate for the development of biofertilizers. [ABSTRACT FROM AUTHOR]