In this research, twenty isolated strains of cellulolytic nitrogen-fixing bacteria were isolated from different soil sources. Cellulase activity of each selected strain was detected by screening of clear zone formation and by using DNS (Dinitrosalicylic colorimetric) method. The clear zone formation were not significant among these strains but amongst them, for cellulose substrate isolated strain K-7 was considered as the most potent isolate in term of their high cellulase productivity in the concentration of 0.452 mg/0.5 ml and in carboxymethyl cellulose substrate, M-1 strain showed maximum yield for cellulase production in the concentration of 0.493 mg/0.5ml. Nitrogen fixation activity of those selected strains was measured by the color changes in G-NFMM (Glucose-Nitrogen Free Mineral Medium) supplemented with BTB (Bromothymol Blue) and ammonium test kit. Composting was studied by using six strains on straw waste. Finished composting was observed for a month and nitrogen rich compost was obtained. The finished compost was used as carrier system and six selected bacterial strains for nitrogen fixation were used as formulated biofertilizer and applied in rice field. They improve rice plant growth, yield and nitrogen content in soil when compared with other rice plant used in chemical fertilizer. Our research can fulfill the aspect of enhancing the usage of environmentally friendly biofertilizer without reducing farmers’ profit by maintaining the good yield.