Southern blight or collar rot of bell pepper (Capsicum annuum L.) caused by Sclerotium rolfsii Sacc., is a serious disease that results in significant yield losses annually. A pot experiment was carried out for the management of this disease using dry biomass of Datura metel, a medicinal plant of the family Solanaceae. The soil was amended with 0.5, 1.0, …, 3.0% dry biomass of D. metel with and without the inoculation of S. rolfsii. The highest disease incidence (100%) was recorded in the positive control where the soil was inoculated with S. rolfsii without any soil amendment. The disease was completely controlled by 2% soil amendment. This soil amendment treatment enhanced bell pepper yield by 30% over the negative control (without any inoculation or amendment) and 136% over the positive control. Activities of defense-related enzymes namely polyphenol oxidase (PPO), peroxidase (POX), and phenylalanine ammonia lyase (PAL) were significantly increased in the positive control. However, the activities of these enzymes were significantly dropped due to the soil amendment with D. metel. This study concluded that the application of 2% dry biomass of D. metel can control collar rot disease resulting in a significant increase in the yield of bell pepper.