The ability to synthesize Indole-3-acetic acid (IAA) is widely associated with the plant growth promoting rhizobacteria (PGPR). The present work deals with isolation and characterization of such bacteria from the rhizosphere of medicinal plant Stevia rebaudiana and optimization of IAA production from its isolates. The optimization of IAA production was carried out at different pH and temperature with varied carbon and nitrogen sources of culture media. Out of different isolates obtained, three of them were screened as efficient PGPRs on the basis of different plant growth promoting attributes. Isolates CA1001 and CA2004 showed better production of IAA at pH 9 (91.7 µg ml-1) and at temperature 37 °C (81.7 µg ml-1). Dextrose (1%) was found to be the best carbon source for isolate CA1001 with 104 µg ml-1 IAA production. Isolate CA 2004 showed best production of IAA 36 µg ml-1 and 34 µg ml-1 at 1.5% and 1% Beef extract as nitrogen source respectively. Isolate CA 1001 showed 32 µg ml-1 IAA production at 0.5% nicotinic acid concentration. From the current study, CA1001 and CA2004 emerged as noble alternatives for IAA production further which also resulted in root and shoot biomass generation in crop plants, hence can be further used as bio-inoculants for plant growth promotion.