Wheat root diseases are typically caused by complex soilborne fungal pathogens. Biocontrol can be effective, but it can be difficult for a single biocontrol strain to achieve a good control effect. Previously, the gene for antibiotic phenazine-1-carboxylic acid (PCA) from Pseudomonas synxantha 2-79 was introduced into Pseudomonas fluorescens HC1-07, which produces cyclic lipopeptide (CLP) naturally. In the present study, recombinant strain HC1-07PHZ produced both PCA and CLP and maintained a similar population size as wild type strain HC1-07 in the wheat rhizosphere. Compared with that of HC1-07, the recombinant strain had a stronger inhibitory effect on pathogens of Rhizoctonia solani AG-8 C1, AG-2-1, Rhizoctonia cerealis R0301, and Fusarium graminearum Schwabe in vitro. When used as a seed-coating treatment, the recombinant strain inhibited Rhizoctonia root rot of wheat, as did strain HC1-07. However, the dose of HC1-07PHZ was 1000-fold less. Liquid chromatography-tandem mass spectrometry (LC–MS/MS) revealed compounds such as pipecolic acid, arachidonic acid, and acetylcysteine in wheat root soil inoculated with three strains (2-79, HC1-07, and HC1-07PHZ) used as seed-coating agents, respectively. The composition of these molecules was very different for different bacteria. These metabolites may trigger plant defense responses, promote plant growth, or combat pathogenic fungi, but analysis of the enrichment pathway showed that these metabolites were mainly from signal pathways involved in plant detoxification and various biochemical processes. In summary, our study showed that recombinant strain HC1-07PHZ greatly improved the biocontrol effect against Rhizoctonia root rot and Fusarium crown rot of wheat.