The potential of cyanobacteria-based compost formulations was evaluated in cotton crop at two agro-ecological locations (Nagpur and Sirsa) as plant growth promoting (PGP) and biocontrol agents. Compost-based formulations fortified with Calothrix sp. or Anabaena sp. enhanced germination and fresh weight of plants, and microbiological activity by 10–15%, besides increased available nitrogen (by 20–50%) in soil at Nagpur. In the fungi-infected fields at Sirsa, Anabaena–T. viride biofilmed formulation performed the best, recording 11.1% lower plant mortality than commercial Trichoderma formulation. Scanning electron microscopy confirmed the colonisation of inoculated cyanobacteria/biofilms on roots. Significant correlation between mortality, increased activity of hydrolytic enzymes and fresh weight of plant roots were recorded. Calothrix sp. and Anabaena sp. proved promising as both PGP and biocontrol agents, while biofilmed formulations substantially reduced mortality of cotton plants in sick plots. This study illustrates the promise of cyanobacteria as viable inoculation option for integrated nutrient and pest management strategies of cotton.