A screening program was carried out to study Streptomyces diversity in red soil from arid and semi-arid regions (Kadapa and Bellary) of India and their ability to grow on unconventional substrates such as petrol and diesel. Of the 38 isolates obtained, five main classes were observed based on aerial mycelium color – gray, white, yellow, orange and red, with white being the predominant class (55%). Fourteen isolates (37%) displayed promising antimicrobial activity. Twelve isolates (32%), some with anti-microbial activity, were tolerant to petrol and diesel and grew on media supplemented with yeast extract to which 2% petrol or diesel was added. Numerical taxonomy study revealed two major clusters broadly comprising the A and B series respectively. Six isolates were identified using Probabilistic Identification of Bacteria software and thirteen placed in specific major clusters. Nearly complete 16S rDNA and partial g-variable sequence analysis of isolate B-14, showing promising antimicrobial activity with ability to grow on diverse carbon substrates and tolerate petrol, showed close resemblance to S. rochei (99%) though with distinctive morphological and physiological characteristics. The strain has been assigned the GenBank accession number GQ426322. Though isolated from soil not exposed to petrol/diesel, the ability of a noteworthy proportion (37%) of streptomycetes to grow in the presence of petrol/diesel fuels suggests possibility of either biodegradation or better tolerance to petrol/diesel toxicity in the presence of suitable nutrients. This indicates that inherent metabolic pathways in streptomycetes can be expressed by biostimulation which can possibly facilitate in identifying more novel isolates.