Abstract Liquid fermentation based formulations of Trichoderma spp. are vulnerable to desiccation compared to solid state fermentation based formulations. The effect of the addition of glycerol, an osmoticant in the production medium on the shelf-life of Trichoderma harzianum was studied. The addition of glycerol at 3, 6 or 9% reduced the water activity in the medium. Both in shaker culture and fermentor, the addition of glycerol in production medium prolonged the shelf-life of talc formulation. The addition of glycerol at 3 and 6% extended the shelf-life (with viability of >2 × 106 CFU g−1) to 7 and 12 months, respectively compared to 4–5 months shelf-life in formulations derived without the addition of glycerol. Regression analysis showed that there was positive correlation between colony forming unit (CFU) and water activity. In bio-efficacy tests, even after storage for 12 months, formulations derived with the addition of glycerol at 3 or 6% in the production medium could protect the tomato plants from Fusarium wilt incidence by 44–50%. The use of addition of osmoticants in production medium for enhancing the shelf-life of liquid fermentation derived fungal formulations is discussed.