Cadmium (Cd) is one of the most toxic contaminants in the environment. The contamination of crop fields with metals like Cd may lead to a significant decrease in productivity due to related toxicity. The present study was conducted with aim to enhance the growth of rice (Oryza sativa), in Cd contaminated soil, by the application of heavy metal resistant—plant growth promoting rhizobacteria, Serratia marcescens S2I7. S2I7 was found to be highly resistant to Cd and positive for phosphate solubilization, production of siderophore, indole acetic acid (IAA), and hydrogen cyanide (HCN). The organism was found to have Glutathione S-transferase (GST) mechanism for detoxification of Cd. GST was induced and its activity was increased significantly in the presence of Cd. When the bacterial strain was applied to rice seedlings, the germination index and growth of seedling were improved in spite of Cd contamination in soil. Pot trial experiments in laboratory conditions showed that the growth of the plants was not affected up to the moderate concentration of Cd (0.75 M), and removal of Cd from the soil was also high (66 mg/kg after 20 days). Interestingly, at low concentration of Cd (0.25 M), there was no significant removal of residual Cd from the soil. However, under the high concentration, rate of removal of Cd was very less after 20 days which may be due to toxic effects (of higher concentration). Here the plant–microbe association may need more time to overcome the effects of Cd and to lead to removal of the metal. Moreover, with the application of isolate S2I7, the growth of the rice plant was comparatively better, as the mean shoot length was increased by 7.9%, and mean root length was increased by 53.7%. Therefore, the application of multifunctional plant-growth promoting bacteria exhibiting resistance for Cd may result in better growth of rice under the stress of the heavy metal. This may also improve the remediation of contaminated sites by alleviating Cd-induced phytotoxicity and promoting the growth of plants.