Sheath blight disease of rice caused by Rhizoctonia solani is a major production constraint in all rice producing areas of the world. The annual losses due to sheath blight are estimated to be 25 % under optimum conditions of disease development. Disease management is currently focused on extensive use of fungicides which has created concerns about environmental pollution, pathogen resistance and escalating costs. Field trials were conducted during the rainy seasons of 2005 and 2006 in a randomized block design with three replications to assess the commercially available bio-pesticide products for their effect on sheath blight. Products evaluated were Achook (Azadirachtin), Biotos (Plant activator), Tricure (Azadirachtin), Ecomonas (Pseudomonas fluorescens) and Bavistin (Carbendazim) in 2005 and Biofer (Plant extract), Biotos, Defender (Plant extract), Ecomonas, Florezen P (P. fluorescens), Trichozen (Trichoderma viride) and Bavistin in 2006. Products were applied three times as foliar sprays after appearance of first symptoms initially and repeated at 10 days interval. The disease severity was measured by adopting Highest Relative Lesion Height (HRLH) at 90 days after transplanting. The chemical (Bavistin) reduced disease severity 52% and 50% compared to the control. Corresponding reductions in disease severity with the bio-pesticides ranged from 22% to 48% in 2005 and from 15% to 31% in 2006. Specifically with PGPR, the disease reductions ranged from 14% to 38% compared to the control in both years. Grain yields were assessed at 120 days after transplanting and significantly increased grain yields (3,901 and 1,938 kg/ha) over control (2,690 and 1,550 kg/ha) were obtained with PGPR in 2005 and 2006 respectively. Our results showed that there is a scope for effective management of sheath blight disease with the use of the currently available PGPR and other products that are available under the conditions evaluated.