Drought is one of the most detrimental factors that causes significant effects on crop development and yield. However, the negative effects of drought stress may be alleviated with the aid of exogenous melatonin (MET) and the use of plant-growth-promoting bacteria (PGPB). The present investigation aimed to validate the effects of co-inoculation of MET and Lysinibacillus fusiformis on hormonal, antioxidant, and physio-molecular regulation in soybean plants to reduce the effects of drought stress. Therefore, ten randomly selected isolates were subjected to various plant-growth-promoting rhizobacteria (PGPR) traits and a polyethylene-glycol (PEG)-resistance test. Among these, PLT16 tested positive for the production of exopolysaccharide (EPS), siderophore, and indole-3-acetic acid (IAA), along with higher PEG tolerance, in vitro IAA, and organic-acid production. Therefore, PLT16 was further used in combination with MET to visualize the role in drought-stress mitigation in soybean plant. Furthermore, drought stress significantly damages photosynthesis, enhances ROS production, and reduces water stats, hormonal signaling and antioxidant enzymes, and plant growth and development. However, the co-application of MET and PLT16 enhanced plant growth and development and improved photosynthesis pigments (chlorophyll a and b and carotenoids) under both normal conditions and drought stress. This may be because hydrogen-peroxide (H₂O₂), superoxide-anion (O²⁻), and malondialdehyde (MDA) levels were reduced and antioxidant activities were enhanced to maintain redox homeostasis and reduce the abscisic-acid (ABA) level and its biosynthesis gene NCED3 while improving the synthesis of jasmonic acid (JA) and salicylic acid (SA) to mitigate drought stress and balance the stomata activity to maintain the relative water states. This may be possible due to a significant increase in endo-melatonin content, regulation of organic acids, and enhancement of nutrient uptake (calcium, potassium, and magnesium) by co-inoculated PLT16 and MET under normal conditions and drought stress. In addition, co-inoculated PLT16 and MET modulated the relative expression of DREB2 and TFs bZIP while enhancing the expression level of ERD1 under drought stress. In conclusion, the current study found that the combined application of melatonin and Lysinibacillus fusiformis inoculation increased plant growth and could be used to regulate plant function during drought stress as an eco-friendly and low-cost approach.