Fusarium oxysporum is a fungal plant pathogen for over 100 agricultural crop species. There are strategies for managing Fusarium wilt, including antagonistic bacteria that offer a promising and sustainable effect. In this work, among the various endophytic bacterial strains, Paenibacillus polymyxa EB.KN35 was selected as the best antifungal strain against F. oxysporum. For eco-friendly biomass production of this bacterium, some agricultural byproducts were tested for cultivation, and a soybean processing byproduct (SPBP) was found to be a suitable C/N source for P. polymyxa EB.KN35 fermentation. The utilization of a 14 L bioreactor system for P. polymyxa EB.KN35 fermentation achieved a high biomass productivity (3.46 × 1011 CFU/mL) in a short time (8 h). In bioactive compound analysis, EB.KN35 was found to be secreting several plant growth-promoting compounds such as GA3, IAA, kinetin, and zeatin (via HPLC) and eleven volatile compounds (via GC–MS). The docking study indicated that some volatile compounds (1, 2, 4, and 9) may play a significant role in inhibiting F. oxysporum. The study results highlight the potential for reusing a soybean processing byproduct as a C/N source for the bioproduction of P. polymyxa EB.KN35 with potential use as a biocontrol agent and biofertilizer.