A marker-assisted approach was adopted to search for Bacillus spp. with potential as biocontrol agents against stem rot disease of canola caused by Sclerotinia sclerotiorum. Bacterial strains were isolated from the rhizosphere of canola and screened using multiplex PCR for the presence of surfactin, iturin A and bacillomycin D peptide synthetase biosynthetic genes. Among the 96 isolates screened, only CS-42 harbored all three genes and was subsequently identified as Bacillus cereus using 16S rRNA gene sequencing. This strain was found to be effective in significantly inhibiting the growth of S. sclerotiorum in vitro and in planta. Scanning electron microscopy studies at the dual culture interaction region revealed that mycelial growth was curtailed in the vicinity of bacterial metabolites. Complete destruction of the outmost melanised rind layer of sclerotia was observed when treated with the bacterium. Transmission electron microscopy of ultrathin sections challenged with CS-42 showed partially vacuolated hyphae as well as degradation of organelles in the sclerotial cells. These findings suggested that genetic marker-assisted selection may provide opportunities for rapid and efficient selection of pathogen-suppressing Bacillus strains for the development of microbial biopesticides.