Pseudomonas strains isolated from the rhizosphere of chickpea (Cicer arietinum L.) and green gram (Vigna radiata L.) were screened for the production of chitinases and cellulases. Five Pseudomonas strains were found to produce appreciable amounts of both enzymes in culture-free supernatants and showed growth inhibition of the two fungi Pythium aphanidermatum (Oomycete) and Rhizoctonia solani (Basidiomycete) in plates on potato dextrose agar medium. The fungal growth inhibition was not correlated with cell wall-degrading enzyme activity, which suggested that other antifungal compounds produced by these rhizobacteria were also involved in antagonism. Coinoculation of the Pseudomonas strains with the Mesorhizobium sp. Cicer strain Ca 181 resulted in a significant increase in nodule biomass when grown under sterilized chillum jar conditions. The results suggest that hydrolytic enzymes produced by Pseudomonas sp. contribute to suppression of plant diseases by inhibiting growth of phytopathogenic fungi and also promote nodulation of legumes by rhizobia.