An endophytic actinomycete, Streptomyces sp. R-5, which had been isolated from a field-grown rhododendron plant, was used to protect rhododendron seedlings in tissue culture from Pestalotia disease caused by Pestalotiopsis sydowiana. R-5 had intense antagonistic activity against P. sydowiana without adversely affecting the seedlings in glass flasks. A suspension of R-5 was spread on the surface of the multiplication medium in glass flasks in which seedlings were growing. Ten days later, the 4th upper leaf of seedlings was inoculated with P. sydowiana and incubated for 14 days. In controls untreated with R-5, substrate mycelia of P. sydowiana grew on all leaves and stems above and below the 4th leaf within 2–3 days of inoculation. Such growth resulted in the wilting death of 54% of seedlings by 14 days. In contrast, only the inoculated leaves turned brown in ca. 90% of seedlings growing on medium treated with R-5. None of these seedlings died. Thus, treatment of the medium surface with R-5 efficiently protects the seedlings from infection by P. sydowiana. Scanning electron microscopy revealed that substrate mycelia of R-5 grew on and beneath the cuticle of leaves of the treated seedlings. Fluorescent microscopy showed that R-5 was also inside the leaves.