Microorganisms and plants can produce indole-3-acetic acid (IAA) by mechanisms that either involve tryptophan or do not involve tryptophan. The control of Zone of inhibition (ZOI) ranged from 1.2 cm to 1.0 cm. A promising antagonistic isolate, Streptomyces sp. VSMKU1027, exhibited robust antagonistic activity against two significant soil-borne phytopathogenic fungi, namely Rhizoctonia solani and Fusarium oxysporum, outperforming the control. The morphology of both R. solani and F. oxysporum, including their sclerotium and spores, became condensed and indistinct, and mycelial disintegration was observed due to the action of VSMKU1027, in contrast to the control. The isolate significantly produced antimicrobial traits and hydrolytic enzymes except hydrogen cyanide and cellulase. Furthermore, the promising isolate VSMKU1027 was identified as Streptomyces sp. based on its morphological, physiological, and biochemical characteristics. In comparison to the control, the isolate VSMKU1027 demonstrated increased synthesis of IAA and the hydrolytic enzyme protease with the corresponding substrates. The production of IAA was optimized on the sixth day, at 35°C and pH 6.5. The highest generation of IAA was recorded, with an ISP2 and 0.4% concentration of L-tryptophan.