Indole-3-acetic acid (IAA) is produced by microorganisms and plants via either tryptophan-dependent or tryptophan-independent pathways. Herein, we investigated the optimisation of IAA production by Streptomyces fradiae NKZ-259 and its formulation as a plant growth promoter to improve economic and agricultural development. The maximum IAA yield achieved using optimal conditions was 82.363 μg/mL in the presence of 2 g/L tryptophan after 6 days of incubation. Thin-layer chromatography (TLC) and high-performance liquid chromatography (HPLC) analysis of putative IAA revealed an RF value of 0.69 and a retention time of 11.842 min, comparable with the IAA standard. Regarding product formulation, kaolin-based powder achieved a suspension rate of 73.74% and a wetting time of 80 s. This carrier exhibited good shelf life stability for NKZ-259, and the cell population did not decrease obviously over 4 months of storage at 4 °C. In vivo analysis of plant growth promotion showed that tomato seedlings treated with kaolin powder containing NKZ-259 cells displayed a significant increase in root and shoot length of 7.97 cm and 32.77 cm, respectively, and an increase in fresh weight and dry weight of 6.72 g and 1.34 g. Compared to controls, plant growth parameters were increased almost it two-fold. Optimising the culture conditions resulted in an almost four-fold increase in IAA secretion by NKZ-259 cells. The results clearly demonstrate that S. fradiae NKZ-259 holds great potential for plant growth promotion and IAA production. Furthermore, kaolin-based powder is an effective carrier for NKZ-259 cells and may be useful for commercial applications.