Bacillus velezensis HKB-1 was isolated from the composted spent mushroom substrate of Lentinula edodes (LeCSMS) and inhibited mycelial growth of phytopathogenic fungal species, Phythhopthora capsici, Collectotrichum coccodes and Fusarium oxysporium by more than 70%. B. velezensis HKB-1 showed bacterial growth rate 10 to 100 times higher than that of other commercial bacterial media in water extract of LeCSMS supplemented with 1% molasses. The LeCSMS medium was effective in promoting the growth of pepper and controlling Phytophthora blight disease of pepper.