Rapid industrialization and anthropogenic activities have significantly contributed to increased petroleum hydrocarbon demand and pollution. For enhancing the oil extraction and removal of organic pollutants from the contaminated soil and water, several physical, chemical, and biological methods have been employed. Among these, bioremediation, and Microbial Enhanced Oil Recovery (MEOR) involving microbes and their metabolites are low-cost and environment-friendly techniques. The present study focused on isolation and identification of bacteria; extraction, purification, and characterization of the biosurfactant; and assessment of the applicability of produced biosurfactant for bioremediation and enhanced oil recovery (EOR). A novel bacterial strain Aeromonas hydrophila RP1 that produces biosurfactant was identified and isolated for the utilization in hydrocarbon degradation and EOR. Characterization by Thin Layer Chromatography, Gas Chromatography-Mass Spectroscopy, Fourier Transform Infrared, and 1H- Nuclear Magnetic Resonance spectroscopy revealed biosurfactant to be of glycolipopeptide nature. Biosurfactant decreased surface tension of water from 72 to 27.4 mN m−1. With a critical micelle concentration of 123 mg L−1, it displayed stability over 4–100 °C temperature, pH of 2–10, and 5–150 g L−1 salinity (as NaCl). Biosurfactant emulsified a range of hydrocarbons like Aviation Turbine Fuel, n-hexadecane, hexane, paraffin oil, and xylene with E24 > 50%. A. hydrophila RP1 displayed moderate affinity (45.77 ± 1.89%) towards hydrocarbons. Biosurfactant facilitated additional ∼28% recovery of the oil and degraded diesel by 77.33% and n-hexadecane by 55.98% after 7 days of incubation. The study demonstrates that glycolipopeptide biosurfactant produced by A. hydrophila RP1 has immense potential for applications in bioremediation and EOR.