Stem rot caused by Sclerotinia sclerotiorum is a major fungal disease of canola worldwide. In Australia the management of stem rot relies primarily on strategic application of synthetic fungicides. In an attempt to find alternative strategies for the management of the disease, 514 naturally occurring bacterial isolates were screened for antagonism to S. sclerotiorum. Antifungal activity against mycelial growth of the fungus was exhibited by three isolates of bacteria. The bacteria were identified as Bacillus cereus (SC-1 and P-1) and Bacillus subtilis (W-67) via 16S rRNA sequencing. In vitro antagonism assays using these isolates resulted in significant inhibition of mycelial elongation and complete inhibition of sclerotial germination by both non-volatile and volatile metabolites. The antagonistic strains caused a significant reduction in the viability of sclerotia when tested in a greenhouse pot trial with soil collected from the field. Spray treatments of bacterial strains reduced disease incidence and yielded higher control efficacy both on inoculated cotyledons and stems. Application of SC-1 and W-67 in the field at 10% flowering stage (growth stage 4Â·00) of canola demonstrated that control efficacy of SC-1 was significantly higher in all three trials (over 2 years) when sprayed twice at 7-day intervals. The greatest control of disease was observed with the fungicide ProsaroÂ® 420SC or with two applications of SC-1. The results demonstrated that, in the light of environmental concerns and increasing cost of fungicides, B. cereus SC-1 may have potential as a biological control agent of sclerotinia stem rot of canola in Australia.