Groundnut varieties grown in non-infested soil (T1), pathogen (Aspergillus niger)-infested soil (T2), and seed treatment with Trichoderma viride JAU60 followed by challenge with fungal pathogen (T3), showed significant differences in percent disease incidence of collar rot in pot culture. Percent disease incidence was higher in GG-13, GG-20 (susceptible) followed by GAUG-10 (moderate), and minimum in J-11, GG-2 (tolerant varieties) in A. niger-infested pot culture at 15 days after sowing (DAS). Seed treatment (T3) of T. viride reduced approximately 51% to 58% disease incidence in different groundnut varieties. The lipid peroxidation product – malondialdehyde (MDA) – content was found to be higher in susceptible varieties grown in pathogen-infested soil (T2) and it was significantly reduced to 56% under T. viride treatment (T3) at 12 DAS. However, tolerant varieties reduced the MDA content by 60% in T3 as compared with the T2 at an earlier stage (9 DAS). The lipoxygenase (LOX) activity rose approximately 3.5-fold in tolerant varieties upon infection (T2) and groundnut seed treated with T. viride (T3) at 12 DAS. Trichoderma treatment (T3) maintained a high level of LOX compared with T2, particularly in tolerant varieties. The pathogen infection ability was positively correlated with LOX activity in tolerant and moderately tolerant varieties of T2 seedlings. MDA content was positively correlated with disease incidence in susceptible varieties followed by induction of LOX activity under T. viride JAU60 treatment (T3). T. viride JAU60 signifies induction of a LOX-related defense response to combat the collar rot disease incidence in groundnut seedlings.