Kengyilia thoroldiana is a nutritionally rich grass species of the Qinghai-Tibet Plateau. Here, to improve its quality and biomass via biological fertilization, we sought out plant-growth promoting rhizobacteria. Our screening found one Bacillus species capable of nitrogen fixation, indole-3-acetic acid production, and tolerating the extreme saline-alkali soil of Qinghai Province. We determined the strain’s growth performance and antagonistic effects with pathogens (Fusarium graminearum, F. acuminatum) and evaluated its impact on K. thoroldiana. The test strain KKLW1 was identified as Bacillusamyloliquefaciens by morphology, adversity culture, and 16S rDNA and gyrB partial sequence analyses. KKLW1 strongly tolerates saline conditions (11% salt, pH 11), and showed stable nitrogen fixation activity and IAA production capacity; its Phl gene, which we amplified, was significant antagonistic to pathogenic pasture fungi. Furthermore, compared with the control, the strain showed clear germination and growth-promoting activity after soaking grass seeds and root-irrigating with the Bacillus suspension, increasing each by 8 and 10–12%, respectively. In sum, the strain KKLW1 has excellent biological properties and stable physiological characteristics in this extreme environment of the Qinghai-Tibet Plateau. We propose KKLW1 for use as a functional strain of microbial fertilizer to increase production and restore vegetation coverage of the Plateau’s grassland. The Qinghai-Tibet Plateau, known as the Third Pole of the world, has a special climate characterized by a high altitude, low temperatures, and strong ultraviolet rays, in which the pasture grows slowly. In recent years, the pasture has been severely degraded because of rodent activity, overgrazing, lack of scientific management, as well as many noxious weeds and other factors, together threatening the persistence of alpine meadow plant communities and habitats (Dong et al., 2015). This environmental deterioration adversely affects the downstream region of the Three Rivers, where the ecological destruction is worsening by day. Therefore, it is imperative we change the status quo, namely by promoting the growth of herbage, restoring native ecological vegetation, and increasing the biomass of grassland using scientific methods that are also and environmentally friendly (Ping et al., 2011). Kengyilia thoroldiana is a representative grass of Kengyilia (Gramineae), a perennial herb that is near source plant of wheat. With it well-developed roots and upright stems, this plant can absorb water deep in soil and tolerate cold and drought spells, and thus deemed suitable for alpine grassland habitats with unfavorable or extreme climatic conditions (Li et al., 2009). Moreover, K. thoroldiana is a rather special plant species in China, where it is mainly distributed in Qinghai and Tibet. In Qinghai Province, K. thoroldiana occurs primarily in the Three Rivers Source Area, a typical environment of the Qinghai-Tibet Plateau at an elevation of 3700–5000 m where a cool climate prevails (Li et al., 2013). Here, K. thoroldiana is a key component of alpine grassland communities in Qinghai Province, well known for its rich nutritional value, good palatability, ease for animal digestion and can be used as ecological restoration vegetation (Li et al., 2013). Many scholars have studied the botany, ecology, cultivation and domestication of this unique grass species, but research on promoting its growth via microbial preparations has not been reported yet. Plant growth-promoting rhizobacteria (PGPR), which live in the plant, can produce metabolites to promote plant growth and inhibit harmful microorganisms; hence, they have become a global hotspot of research (Santoyo et al., 2016). As root-promoting bacteria, Bacillus spp. can improve plant growth in different ways. For example, by improving the utilization rate of plant rhizosphere nutrition and producing plant hormone substances, such as gibberellins, indore-3-acetic acid (IAA), cytokinin, and other substances (Fan et al., 2016). However, indirect promoting effects are also possible. These include the stimulation of plant-induced systemic resistance (induced systemic resistance, ISR) or direct inhibition of pathogenic bacterial growth, which reduce the occurrence of plant diseases that could slow the growth of host plants (Kloepper et al., 2016; Idris et al., 2007). Additionally, some Bacillus species can fix nitrogen, dissolve phosphorus, decompose organic matter of soil to improve soil fertility and soil nutrient cycling, and also provide plant with a more suitable growth environment (Stoof et al., 2015). The extensive agricultural use of synthetic pesticides and fertilizers has increased crop yields but also brought about negative effects on human health and the ecological environment (Nahi et al., 2016; Gaiero et al., 2013). Since Bacillus can produce heat-resistant spores, which are not only beneficial for the production and processing of bio-control agents but also convenient for their application and long-term storage, these bacteria may outcompete fertilizers, pesticides and other microbial preparations (Dong et al., 2013). The objectives of this study were to investigate the application of PGPR in extreme habitats to promote forage growth in alpine grassland. We isolated and screened a fungus in K. thoroldiana, which according to the 18S rDNA molecular identification was Fusarium acuminatum. This plant pathogen is of great concern in the region because it can easily spread through the soil due to its reproduction mode, potentially causing devastating crop yield losses. We screened a Bacillus strain from an extreme habitat according to the PGPR growth indices—namely nitrogen fixation, IAA production, and antagonistic pathogens—and studied its growth-promoting effect on K. thoroldiana. Collectively, this work provides a further theoretical basis and technical support for the development and utilization of microbial resources. Thus far, only few reports have investigated the application of PGPR in extreme habitats to promote forage growth in alpine grassland. Our results may help lay the foundation for utilizing extreme environmental microorganisms to promote forage growth, restore vegetation of the Plateau’s grasslands, and develop animal husbandry practices that are ecologically sustainable.