Increasing evidence suggests that the endophytic fungus Piriformospora indica helps plants overcome various abiotic stresses, especially heavy metals. However, the mechanism of heavy metal tolerance has not yet been elucidated. Here, the role of P. indica in alleviating cadmium (Cd) toxicities in tobacco was investigated. It was found that P. indica improved Cd tolerance to tobacco, increasing Cd accumulation in roots but decreasing Cd accumulation in leaves. The colonization of P. indica altered the subcellular repartition of Cd, increasing the Cd proportion in cell walls while reducing the Cd proportion in membrane/organelle and soluble fractions. During Cd stress, P. indica significantly enhanced the peroxidase (POD) activity and glutathione (GSH) content in tobacco. The spatial distribution of GSH was further visualized by Raman spectroscopy, showing that GSH was distributed in the cortex of P. indica-inoculated roots while in the epidermis of the control roots. A LC-MS/MS-based label-free quantitative technique evaluated the differential proteomics of P. indica treatment vs. control plants under Cd stress. The expressions of peroxidase, glutathione synthase, and photosynthesis-related proteins were significantly upregulated. This study provided extensive evidence for how P. indica enhances Cd tolerance in tobacco at physiological, cytological, and protein levels.