The legume–rhizobial interaction results in the formation of symbiotic nodules in which rhizobia fix nitrogen. During the process of symbiosis, reactive oxygen species (ROS) are generated. Thus, the response of rhizobia to ROS is important for successful nodulation and nitrogen fixation. In this study, we investigated how Azorhizobium caulinodans, a rhizobium that forms both root and stem nodules on its host plant, regulates ROS resistance. We found that in-frame deletions of a gene encoding the putative catalase-peroxidase katG or a gene encoding a LysR-family regulatory protein, oxyR, exhibited increased sensitivity to H2O2. We then showed that OxyR positively regulated katG expression in an H2O2-independent fashion. Furthermore, we found that deletion of katG or oxyR led to significant reduction in the number of stem nodules and decrease of nitrogen fixation capacities in symbiosis. Our results revealed that KatG and OxyR are not only critical for antioxidant defense in vitro, but also important for nodule formation and nitrogen fixation during interaction with plant hosts.