Microbes produce various bioactive metabolites that can influence plant growth and stress tolerance. In this study, a plant growth-promoting rhizobacterium (PGPR), strain S14, was identified as Micrococcus luteus (designated as MlS14) using de novo whole-genome assembly. The MlS14 genome revealed major gene clusters for the synthesis of indole-3-acetic acid (IAA), terpenoids, and carotenoids. MlS14 produced significant amounts of IAA, and its volatile organic compounds (VOCs), specifically terpenoids, exhibited antifungal activity, suppressing the growth of pathogenic fungi. The presence of yellow pigment in the bacterial colony indicated carotenoid production. Treatment with MlS14 activated the expression of β-glucuronidase (GUS) driven by a promoter containing auxin-responsive elements. The application of MlS14 reshaped the root architecture of Arabidopsis seedlings, causing shorter primary roots, increased lateral root growth, and longer, denser root hairs; these characteristics are typically controlled by elevated exogenous IAA levels. MlS14 positively regulated seedling growth by enhancing photosynthesis, activating antioxidant enzymes, and promoting the production of secondary metabolites with reactive oxygen species (ROS) scavenging activity. Pretreatment with MlS14 reduced H2O2 and malondialdehyde (MDA) levels in seedlings under drought and heat stress, resulting in greater fresh weight during the post-stress period. Additionally, exposure to MlS14 stabilized chlorophyll content and growth rate in seedlings under salt stress. MlS14 transcriptionally upregulated genes involved in antioxidant defense and photosynthesis. Furthermore, genes linked to various hormone signaling pathways, such as abscisic acid (ABA), auxin, jasmonic acid (JA), and salicylic acid (SA), displayed increased expression levels, with those involved in ABA synthesis, using carotenoids as precursors, being the most highly induced. Furthermore, MlS14 treatment increased the expression of several transcription factors associated with stress responses, with DREB2A showing the highest level of induction. In conclusion, MlS14 played significant roles in promoting plant growth and stress tolerance. Metabolites such as IAA and carotenoids may function as positive regulators of plant metabolism and hormone signaling pathways essential for growth and adaptation to abiotic stress.