Sugarcane smut, caused by the fungal pathogen Sporisorium scitamineum, leads to significant economic losses in the global sugarcane industry. Bio-organic fertilizers (BF) offer a promising and sustainable strategy to mitigate smut incidence and enhance sugarcane growth. While the application of BF is known to modulate root exudates and rhizosphere microbial community structure, thereby promoting disease resistance, the precise mechanisms underpinning BF-mediated suppression of sugarcane smut remain largely unclear. This study investigated the microbiological mechanisms of smut suppression using a pot experiment, comparing a novel BF treatment (composted substrate enriched with Bacillus subtilis, Bacillus altitudinis, Bacillus cereus, Trichoderma harzianum, and Trichoderma longibrachiatum, biochar, and calcium carbonate) with a control receiving only conventional organic fertilizer. BF application significantly increased plant height (by 95.2%), dry weight (137.5%), fresh weight (253.3%), and sugar content (43.1%) relative to the control. Furthermore, the BF treatment enhanced catalase activity by 167.8% and peroxidase activity by 102.3% in sugarcane leaves, while the control effectiveness against the incidence of smut disease reached 88.0%. Analysis of the rhizosphere microbiome revealed that BF application significantly altered microbial alpha- and beta-diversity. Specifically, the BF treatment notably enriched beneficial genera such as Pseudomonas and Meyerozyma. Beta-diversity analysis revealed distinct microbial community structures in BF-treated rhizosphere soil compared to the control. Correlation and random forest analyses identified Pseudomonas and Meyerozyma as key taxa that were positively associated with sugarcane growth parameters and negatively correlated with smut incidence. These findings elucidate the dual role of this novel BF in enhancing sugarcane growth and suppressing smut incidence through the strategic reshaping of the rhizosphere microbiome.