Three IAA-producing strains were isolated from the peanuts growing in red soil. Among the three strains, ZH5 showed the highest and most stable IAA excreting ability (43.18 μg/ml in 24 h cultivation), combining additional phosphate-dissolving capability as well. Based on morphological, part of the physiological and biochemical characteristics and 16S rRNA sequences analysis, it was identified as Bacillus megaterium. Single factor tests were designed to explore conditions optimal to growth and fermentation of the strain. Results showed that the optimum condition for growth was consistent with that for excretion, the optimal culturing conditions for both growth and IAA secretion were pH 6–8, filling volume 50 ml/250 ml flask, incubation at 30℃ for 24 h, the best carbon and nitrogen sources were mannit and yeast extract. These results provided the experimental basis about the strains for the development of bio-organic fertilizer in the future.