We previously isolated a rhizobacterium (Bacillus subtilis IJ-31) and demonstrated that its associated allelochemicals could indicate plant growth retardation. However, little is known about how the growth of plants is regulated by B. subtilis IJ-31 and its allelochemicals. In this study, we investigated whether plant growth retardation in this relationship occurred through the inhibition of gibberellin (GA) biosynthesis. GA $3{eta}$-hydroxylase activity was found to be inhibited by B. subtilis IJ-31 and hydrocinnamic acid (HCA), which is one of the allelochemicals produced by B. subtilis IJ-31. Additionally, thin layer chromatography (TLC) demonstrated that B. subtilis IJ-31 culture broth and HCA both inhibit GA $3{eta}$-hydroxylase (MBP-GA4) activity. The retardation of plants by HCA was then confirmed in vivo and in vitro using a Ryegrass and Arabidopsis growth retardation assay. Furthermore, treatment with either B. subtilis IJ-31 culture extract or its allelochemicals resulted in significant down-regulation of XTR9 gene expression in Arabidopsis. Overall, we identified the functional mechanism of plant growth retardation by B. subtilis IJ-31 and its allelochemicals.