Soil streptomycetes are commonly antagonistic against plant pathogens. However, interactions involving increased defense responses in the host plant, leading to suppression of plant disease development, have not yet been detailed. Here, the mechanisms were studied of disease suppression by Streptomyces sp. GB 4-2 against Heterobasidion root and butt rot in Norway spruce (Picea abies) seedlings. GB 4-2 promoted mycelial growth of the phytopathogenic fungus, germination rate of fungal spores, extension of germ tubes and early colonization of outer cortical layers of the plant root. Reduced colonization of the inner cortical cell layers was accompanied by the induction of cell wall appositions, and increased xylem formation in the vascular cylinder emerged after bacterium-fungus coinoculation. Bacterial treatment led to decreased water content in roots and needles and increased photosynthetic yield (F(v)/F(m)) and peroxidase activities in needles. The infection of needles by Botrytis cinerea was reduced by bacterial pretreatment. Complex interactions of GB 4-2 with Norway spruce and Heterobasidion abietinum were discovered. The bacterium promoted the growth of the phytopathogenic fungus but induced plant defense responses. Host responses indicate that GB 4-2 induces both local and systemic defense responses in Norway spruce.