We screened 15 bacterial isolates from soil samples collected from Matrouh Governorate, Egypt, for antagonistic activity against phytopathogens. Isolate SM3 showed the highest inhibitory effect and was identified as Bacillus atrophaeus strain SM3 (GenBank accession no.: MZ741525) using 16S rRNA gene sequence analysis. Its antagonistic activity was confirmed against four bacterial phytopathogens (Erwinia carotovora subsp. carotovora strains Pep7C, Cab21B2, and Cab45B and Erwinia chrysanthemi strain Car1B) and four fungal phytopathogens (Curvularia lunata, Fusarium oxysporum, Aspergillus awamori, and Penicillium sp.). Furthermore, B. atrophaeus SM3 inhibited the mycelial growth of C. lunata by 93.4%, followed by Penicillium sp. (77.8%), F. oxysporum(61.7%),andA. awamori (41.0%). Transmission electron microscopy examination of the fungal isolates antagonized by B. atrophaeus SM3 revealed morphological changes, including cell shrinkage, alternations in cell wall thickness, a light-scattering cytoplasm, and cytoplasmic reduction. Gas chromatography–mass spectroscopy analysis of a crude extract of B. atrophaeus showed the presence of many compounds, such as tridecanoic acid, pyrrole, pentadecanoic acid, and various fatty acids, with known biological activity for controlling pathogenic microorganisms. Thus, B. atrophaeus can be used as an eco-friendly biocontrol agent for successful plant disease management strategies.