Basil is an economically significant vegetable and medicinal plant, valued for its diverse applications throughout its growth stages. This study focused on identifying endophytic bacteria that could be used at lower concentrations than conventional biofertilizers and biocontrol agents to promote plant growth, manage damping-off caused by Pythium ultimum, and enhance the production of defensive compounds. In this experiment, 20 endophytic bacteria were isolated from 35 bacterial strains collected from the Lamiaceae family in Iran’s Zagros Mountains. These endophytes were initially screened based on their effects on seedling emergence and microgreen growth. The most promising strains, selected based on these two criteria, were then further evaluated for seed germination, disease severity, biomass accumulation, and the content of defensive compounds. Considering the highest efficiency across all evaluated parameters at the lowest concentrations (i.e., 103 and 104 CFU/ml), the Pseudomonas grimontii EBA1 was selected and subsequently tested under greenhouse conditions. The results showed that seed germination was significantly improved, and disease severity and incidence were reduced by 20.23% and 88.36%, respectively, in 14-day-old basil microgreens. Furthermore, total phenol content and the activities of catalase and peroxidase were increased by 66.73%, 88.5%, and 58.45%, respectively, in the microgreens. A 230.04% increase in essential oil content was observed upon P. grimontii treatment, along with the identification of 2,6-Octadienal, 3,7-dimethyl-, (Z)- as a predominant constituent in the essential oil. However, the levels of estragole in these plants were significantly reduced. In conclusion, this study highlights the potential of Pseudomonas grimontii EBA1 as a biofertilizer and biocontrol agent capable of mitigating the harmful effects of P. ultimum on basil, supporting its application in sustainable agriculture.