In Ethiopia onion has an immense economic, nutritional and medicinal value among allrnvegetables. The crop is also proved to be income generating for smallholder farmers of eastrnShewa. However, basal rot disease has put a major hindrance for the productivity of onion inrnthe area. Therefore, This study was conducted to isolate and characterizes Fusarium isolatesrnof onion and to evaluate the antagonism effects of Bacillus isolates to control the disease. Forrnisolation of Fusarium species a total of 43 diseased plant samples were collected randomlyrnfrom three onion growing districts of east Shewa Zone. Biocontrol agents were isolated fromrnthe rhizosphere soil of onion. According to morphological characters, all isolates werernidentified as Fusarium oxysporum, Fusarium solani and Fusarium proliferatum.rnPathogenicity of the isolates were tested under in vitro and glasshouse conditions. Rot lengthsrnmeasured on cross section of onion bulbs caused by Fusrium isolates ranged from 0.23 cmrn(AAUFI2 and AAUFI6 each) to 2.1 cm (AAUFI16). The shortest root length (22.6 mm) wasrnproduced by isolates AAUFI16 while the shortest shoot length (138 mm) and the smallest dryrnweight (0.5 g) were produced by isolate AAUFI2. Percentage incidence of the isolates rangedrn58.3% to 100%. Bacillus isolates were effective against Fusarium isolates. In vitro mycelialrngrowth inhibition percentage by Bacillus isolate ranged from 53.6% (in AAUFI20) to 72.3%rn(in AAUFI4). Incidence of basal rot disease was significantly reduced by up to 41.5%rn(average) after treated with Bacillus isolate while root length, shoot length and dry weightrnincreased significantly compared to the positive control. Percentage of disease control byrnisolate AAUBI3 ranged 33.3% to 66.67%. Based on the internal transcribed spacer (ITS)rnregion of ribosomal DNA (rDNA) restriction fragment length polymorphism (RFLP) analysis,rnten Fusarium isolates were divided into two major groups with similarity coefficient rangedrnfrom 0.38 to 1.0. Effects of basal rot disease on onion crop can be reduced by using thisrnbioagents with other control methods.rnrnrnKeywords: Allium cepa L., Antagonism, Bacillus, Fusarium, Genetic diversity, athogenicity