Wheat Fusarium crown rot (FCR), predominantly caused by Fusarium species, is a devastating fungal disease that severely threatens global wheat production. In this study, we combined phytopathological assays, molecular techniques, and bioinformatic analyses to systematically identify the causal agents of FCR in Xinjiang and to screen for potential biocontrol bacteria. A total of 296 fungal isolates were obtained from 195 FCR samples, collected from Yumin County and Xinhe County. Morphological and phylogenetic analyses revealed that Fusarium culmorum was the predominant pathogen, accounting for 73.6% of the total isolates. To evaluate the resistance of local wheat cultivars, F. culmorum XN22-1, a highly virulent strain from Xinhe County, was inoculated to 30 wheat varieties. The results demonstrated that most cultivars lacked resistance to FCR, with the exception of three varieties—Xinchun 19, Xinchun 50, and Youpi 23, which showed a mid-resistance. Given the scarcity of resistant cultivars, we focused on biological control. To control FCR, Pseudomonas aeruginosa J-7, exhibiting broad-spectrum antagonistic activity, was successfully isolated from rhizosphere soil based on the analysis of healthy rhizosphere soil microbial diversity. Subsequently, pot experiments showed that P. aeruginosa J-7 could significantly reduce the disease incidence and lower the disease index of wheat FCR. Furthermore, whole-genome sequencing, in-plate metabolite analysis, and observation on inhibition of spores and mycelium revealed that P. aeruginosa J-7 mediates its biocontrol activity primarily through the production of phenazine and siderophores, which collectively inhibit conidial germination and cause structural damage to the mycelium. This study not only clarifies the composition of FCR pathogens in Xinjiang but also provides a promising biocontrol agent and new strategic insights for the management of wheat crown rot.