Fusarium oxysporum is one of pathogens causing the damping-off disease of Plantago psyllium in Iran. A greenhouse experiment was conducted to assess the effect of Bacillus subtilis and vermicompost singly and in combination on control of Fusarium–induced damping-off in psyllium. The results showed that vermicompost or B. subtilis, significantly increased the growth of psyllium seedlings and both were effective biocontrol agents against F. oxysporum. Among treatments at least damping-off incidence was recorded in combination of 50% vermicompost and B. subtilis. Results for the first time exhibited that vermicompost as well as B. subtilis induced systemic resistance through nitric oxide (NO) signaling and their combined application further than their individual treatments induced development of plant defense related enzymes including β-1,3-glucanase (GLU), phenylalanine ammonia-lyase (PAL), polyphenol oxidase (PPO) and the activities of antioxidant enzymes (ascorbate peroxidase, catalase, superoxide dismutase and peroxidase) and also more effectively reduced lipid peroxidation in psyllium leaves. These findings suggested potential of B. subtilis in promoting plant growth as well as inducing systemic resistance in the host plants, was enhanced by vermicompost application.