Watermelon Fusarium wilt is a common soil-borne disease that has significantly affected its yield. In this study, fusaric acid-deficient mutant designated as ΔFUBT (mutated from Fusarium oxysporum f. sp. niveum, FON) was obtained. The ΔFUBT mutant showed significant decrease in fusaric acid production but maintained wild-type characteristics, such as in vitro colony morphology, size, and conidiation. A field pot experiment demonstrated that ΔFUBT could successfully colonize the rhizosphere and the roots of watermelon, leading to significant reduction in FON colonization in the watermelon plant. In addition, ΔFUBT inoculation significantly improved the rhizosphere microenvironment and effectively increased the resistance in watermelon. This study demonstrated that a nonpathogenic Fusarium mutant (ΔFUBT) could be developed as an effective microbial control agent to alleviate Fusarium wilt disease in watermelon and increase its yield.