A comparative study was performed in gnotobiotic and greenhouse conditions to evaluate the effect of exogenous application of indole-3-acetic acid (IAA) and inoculation of Methylobacterium spp. possessing 1-aminocyclopropane-1-carboxylate deaminase (ACCD) and IAA activity on red pepperand tomato seedling growth and development. Application of 1.0 ${mu}g;mL^{-1}$ IAA positively influenced root growth while high concentrations (>10.0 ${mu}g;mL^{-1}$) suppressed root growth of red pepper and tomato under gnotobiotic condition. On the other hand, inoculation of Methylobacterium strains with ACCD activity and IAA or without IAA enhanced root growth in both plants. Similarly, under greenhouse condition the inoculation of Methylobacterium sp. with ACCD activity and IAA enhanced plant fitness recorded as average nodal length and specific leaf weight (SLW) but the effect is comparable with the application of low concentrations of IAA. Seedling length was significantly increased by Methylobacterium strains while total biomass was enhanced by Methylobacterium spp. and exogenous applications of < 10.0 ${mu}g;mL^{-1}$ IAA. High concentrations of IAA retard biomass accumulation in red pepper and tomato. These results confirm that bacterial strains with plant growth promoting characters such as IAA and ACCD have characteristic effects on different aspects of growth of red pepper and tomato seedlings which is comparable or better than exogenous applications of synthetic IAA.