Novel strains of rhizobacteria, Pseudomonas fluorescens Pf 9A-14, Pseudomonas sp. Psp. 8D-45 and Bacillus subtilis Bs 8B-1, showed broad-spectrum antagonistic activity and provided suppression of Pythium damping-off and root rot of cucumber. Their biocontrol potential was further investigated for suppression of additional seedling diseases of cucumber (Phytophthora capsici) and radish (Rhizoctonia solani). Bacterial strains were also characterised for production of antibiotics, metabolites, volatiles, phytohormones and lytic enzymes. Seed and pre-plant applications of all three antagonistic bacteria as cell suspension and talc or irradiated peat formulations to the infested potting mix provided overall high level of suppression of Phytophthora damping-off and root rot of cucumber (66–85% healthy seedlings) and relatively low level of suppression of Rhizoctonia damping-off of radish (18–38% healthy seedlings). Bacterial treatments also resulted in higher plant fresh masses. Seed coating with irradiated peat formulation of a mixture of three bacteria resulted in superior control of Phytophthora damping-off and root rot of cucumber and much higher plant fresh masses. The presence of genes for biosynthesis of phenazine-1-carboxylic acid, 2,4-diacetylphloroglucinol, pyrrolnitrin and pyoluteorin was confirmed in Pseudomonas strains, and that of fengycin, bacillomycin, bacilysin, surfactin and iturin A in B. subtilis Bs 8B-1. All three strains produced HCN, salicylic acid, indole-3-acetic acid, protease and β-1,3-glucanase. Both Pseudomonas strains produced siderophores and only P. fluorescens Pf 9A-14 showed phosphate solubilisation and chitinase activity. All three strains inhibited pathogen growth by producing volatiles, and gas chromatography–mass spectrometry analysis revealed eight compounds in Pf 9A-14, 10 in Bs 8B-1 and 4 in Psp 8D-45, some with known antifungal activity. The antagonistic and plant-growth promotion activities of these strains might be due to production of antibiotics, metabolites, lytic enzymes or phytohormones.