Arbuscular mycorrhizal (AM) fungi (e.g., Rhizophagus species) recruit specific bacterial species in their hyphosphere. However, the chemical interplay and the mutual benefit of this intricate partnership have not been investigated yet, especially as it involves bacteria known as strong producers of antifungal compounds such as Bacillus velezensis. Here, we show that the soil-dwelling B.velezensis migrates along the hyphal network of the AM fungus R.irregularis, forming biofilms and inducing cytoplasmic flow in the AM fungus that contributes to host plant root colonization by the bacterium. During hyphosphere colonization, R.irregularis modulates the biosynthesis of specialized metabolites in B.velezensis to ensure stable coexistence and as a mechanism to ward off mycoparasitic fungi and bacteria. These mutual benefits are extended into a tripartite context via the provision of enhanced protection to the host plant through the induction of systemic resistance.