1-Hydroxyphenazine (HP) is a heterocyclic nitrogenous compound which reported various potential bioactivities. The current work aimed to utilize soybean residue by-product (SRBP) as a C/N source for the biosynthesis of HP via fermentation and investigated its potent inhibition against some plant pathogen fungi. The novel medium for effective HP production by P. aeruginosa TUN03 was investigated comprising 1.75% C/N source (SRBP/Tryptic Soy Broth (TSB) ratio of 8/2), 0.05% FeSO4, and 0.05% K2HPO4 to obtain a high yield of HP at 19.23 μg/mL in a small flask. HP was pathogen using a 14 L-bioreactor and achieved higher productivity (32.01 μg/mL) in a shorter fermentation time (10 h) compared to its fermenting at a small scale in flask. In anti-fungal tests, this compound showed potential inhibition against Fusarium oxysporum F10 with a high inhibitory value of 65% and moderate effect against Gongronella butleri F07 (35%) and Fusarium incarnatum F13 (30%). HP was further evaluated for its effect against spore germination of F. oxysporum F10 and showed high inhibition value of 75%. The result of this work suggested that SRBP is a suitable C/N source for the production of HP with potential use a fungicidal agent.