BACKGROUND The continuous cropping of peanuts is a primary cause of yield and quality loss. Solutions to this problem should be therefore developed to ensure the sustainability of peanut production. RESULTS In this study, colonization by the endophytic fungus Phomopsis liquidambari was detected, which led to significantly improved rhizosphere soil microenvironment, enhanced N, P and K assimilation and suppressed incidence of peanut disease. Statistical analysis demonstrated that the yield enhancement was significantly correlated with improvement of the rhizosphere soil microenvironment and the peanut's physiological status by P. liquidambari colonization. In addition, P. liquidambari colonization also significantly improved peanut quality. CONCLUSION Our results indicate that the practical application of the endophytic fungus P. liquidambari has a strong potential to alleviate the obstacles associated with continuous peanut cropping under field conditions. © 2018 Society of Chemical Industry