An endophytic fungus isolated from rhizome of Acorus calamus Linn, was identified as Penicillium citrinum (AVGE1), on the basis of morphological characteristics and 18s rRNA partial gene analysis. This endophytic fungus was evaluated for biocontrol of Collitotrichum acutatum and C. gloeosporioides, pathosystems of chilli along with plant growth promotion   in chilli at seedling stage. P.citrinum (AVGE1) showed strong antagonistic activity against two Colletotrichum sp. The activity of extracellular hydrolytic enzymes amylase, lipase and protease was also high in this culture fluid. This isolate exhibited plant growth promoting characters such as production of IAA, Ammonia and Phosphate solubilisation. The levels of Phosphate solubilisation, IAA and Ammonia in P.citrinum were 777ppm, 125 μg/ml, 16.08 μg/ml, respectively.7days old Fungal culture broth of P. citrinum (AVGE1) was incorporated into plastic pots containing chilli seeds var. LCA 334 and growth data was recorded periodically at an interval of 2 weeks. P.citrinum (AVGE1) significantly increased number of leaves, root and shoot length, and leaf surface area in chilli plant compared to control. This study revealed, endophytic fungi P.citrinum (AVGE1) enhancing growth in chilli seedlings.

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