•First report of B. velezensis from F. hupehensis acting as a biocontrol agent.•B. velezensis D61-A showed a promising biocontrol agent for rice sheath blight.•B. velezensis D61-A has a broad antifungal spectrum, producing some lytic enzymes. To find bacteria with potential biological control activity against the rice sheath blight pathogen, Rhizoctonia solani, bacterial endophytes from Fraxinus hupehensis were isolated, and screened for antifungal activity by dual culture assay. Over 30 bacterial isolates were obtained, and strains were examined for antifungal efficacy on detached leaves and in planta (rice), and for antagonistic mechanisms. Strain D61-A, tentatively identified as Bacillus velezensis based on sequence analyses of 16S rDNA and gyrB gene, showed the strongest inhibitory activity against R. solani with an inhibition rate of 80.1%, and was selected for further study. This strain produced cell-wall-degrading enzymes (protease and cellulase), siderophores and non-volatile metabolites. Crude protein extracted from D61-A byprecipitationwith ammonium sulfate exhibited strong inhibition (60.2%) of R. solani at 50 μg/mL. The strain gave 71% reduction in lesion length in a detached inoculated leaf assay. In the greenhouse and the field, the control efficacy of D61-A could reach 61.5% and 74.6%, respectively. To the best of our knowledge, this is the first report on screening and evaluation of endophytic biocontrol bacteria from F. hupehensis.