Twenty bacterial isolates were evaluated for their antagonistic activity against Sclerotium oryzae (Cattanoe). The antagonists were selected based on their ability to inhibit the external growth of S. oryzae from infected rice plants. Three bacterial isolates viz., SRR-1, SRR-3 and SRR-6 were identified as potent antagonists of S. oryyzae by dual culture technique. Both SRR-1 and SRR-3 inhibited the mycelial growth of S. oryzae upto the extent of 88% followed by SRR-6 (86.66%). All the fungicides tested showed 100 per cent inhibition of mycelial growth of the pathogen except validamycin which inhibited only 88.88% when compared to control. The potential bacterial bioagent SRR-1 was found to be most compatible with the systemic fungicide thiophanate methyl (95.70%) and also with insecticide cartap hydrochloride (91.69%). Among the three antagonists, the bioagent SRR-1 produced diffusible volatile metabolites which inhibited the pathogen growth upto 100% under in vitro.