Root-knot nematodes (Meloidogyne spp.) are notorious plant-parasitic nematodes that affect agricultural crops. These obligate soil-dwelling parasites typically maneuver the host plant physiology by forming specialized feeding cells resulting in heavy yield losses. Scant management tools are available to effectively combat this pest. In an exploratory attempt of identifying new fungal biocontrol agent(s) for M. incognita from India, a Paecilomyces tenuis isolate from rhizosphere soil was found to incur > 90% mortality of the infective second-stage juveniles (J2s) at 24 h post-exposure to the fungal filtrate with about 87% parasitization. The fungal filtrate also significantly reduced the egg hatching and host-root penetration of M. incognita under in vitro and in vivo conditions revealing its effectiveness in curbing nematode pathogenicity with positive effects on plant growth. Chromatographic analyses revealed the presence of Huperzine A (433.56 mg L⁻¹) in the P. tenuis isolate. Besides, the isolate possessed acetylcholinesterase inhibition attribute with an IC₅₀ of 2.85 ± 0.12 mg mL⁻¹ of the fungal filtrate. Further, GC-MS analysis revealed the production of other nematicidal compounds by the fungus including acetic acid. To conceptualize the mode of nematicidal action, RNA-Seq was done post-treatment of the M. incognita J2s and model worm Caenorhabditis elegans with fungal filtrate and pure Huperzine A. The transcriptomic profile unraveled the molecular intricacies underlying the nematicidal action affecting several biological pathways and developmental checkpoints of the nematode. Thus, the P. tenuis isolate offers significant potential to be used as a biocontrol agent against M. incognita along with its commercial use for Huperzine A production.