Botrytis cinerea is an important fungal pathogen that causes gray mold disease in plants. Previously, Bacillus velezensis TCS001 live culture presented broad-spectrum antifungal activity against various plant pathogenic fungi and oomycetes, particularly B. cinerea . Here, the bioactivity of lipopeptides produced by TCS001 against B. cinerea was investigated. The IC 50 values of the crude lipopeptide extract (CLE) from TCS001 to suppress mycelial growth and conidial germination were 14.20 and 49.39 mg/L, respectively. SEM and TEM imaging revealed that CLE caused morphological deformities and ultrastructural changes in the mycelium. Transcriptomic analyses combined with Δ Bcpsd mutant construction demonstrated that the CLE could confer antifungal activity via suppressing Bcpsd expression in the pathogen. In addition, the CLE activated the plant immune system by increasing the content of defense-related enzymes and the expression of marker genes in immunity signaling pathways in cucumber plants. Therefore, TCS001 CLE could be potentially developed into biopesticides for the biocontrol of gray mold disease.