Aims To evaluate the potential of chitinolytic endophytic Actinomycetes isolated from medicinal plants in order to diminish the collar rot infestation induced by Sclerotium rolfsii in chickpea. Methods and Results Sixty‐eight chitinolytic endophytic Actinomycetes were recovered from various medicinal plants and evaluated for their chitinase activity. Among these isolates, 12 were screened for their plant growth promoting abilities and antagonistic potential against Sc. rolfsii. Further, these isolates were validated in vivo for their ability to protect chickpea against Sc. rolfsii infestation under greenhouse conditions. The isolates significantly (P < 0·05) increased the biomass (1·2–2·0 fold) and reduced plant mortality (42–75%) of chickpea. On the basis of 16S rDNA profiling, the selected antagonistic strains were identified as Streptomyces diastaticus, Streptomyces fradiae, Streptomyces olivochromogenes, Streptomyces collinus, Streptomyces ossamyceticus and Streptomyces griseus. Conclusion This study is the first report of the isolation of endophytic Actinomycetes from various medicinal plants having antagonistic and plant growth promoting abilities. The isolated species showed potential for controlling collar rot disease on chickpea and could be useful in integrated control against diverse soil borne plant pathogens. Significance and Impact of the Study Our investigation suggests that endophytic Actinomycetes associated with medicinal plants can be used as bioinoculants for developing safe, efficacious and environment‐friendly biocontrol strategies in the near future.