This study investigated the utilization of invasive Pistia stratiotes (water lettuce) for developing biodegradable nursery pots with antimicrobial and plant growth-promoting properties. The optimized formulation containing P. stratiotes, neem cake, and groundnut shell powder at a 2:1:1 ratio, bound with gelatinised corn starch, produced stable and crack-resistant biopots. The methanolic extract exhibited the highest antibacterial activity against Staphylococcus sp. (2.1 ± 0.15 cm) and E. coli (1.6 ± 0.10 cm), with a functional MIC of 0.625 µL well⁻¹. The aqueous extract inhibited Sclerotium rolfsii and Phytophthora spp. by 56.34 ± 2.81% and 42.22 ± 2.14%, respectively, while the antifungal MIC was 1.25 µg mL⁻¹. GC–MS identified 19 compounds representing 95.70% of the total chromatographic area, with palmitic acid (12.88%), linoleic acid (10.76%), oleic acid (9.94%), β-sitosterol (8.95%), phytol (7.36%), and stigmasterol (6.22%) as major constituents. Tomato germination reached 90.0 ± 2.89% in biopots compared with 70.0 ± 2.89% under chemical treatment and 60.0 ± 2.89% in the control (F = 12.50, p = 0.007). Biopot-grown seedlings recorded a root length of 7.16 ± 0.29 cm, shoot length of 12.67 ± 0.48 cm, fresh biomass of 0.73 ± 0.04 g plant⁻¹, dry biomass of 0.112 ± 0.005 g plant⁻¹, and seed vigour index of 1586.4 ± 41.8. Overall, P. stratiotes-based biopots provide a promising biodegradable alternative to conventional plastic nursery containers while supporting antimicrobial activity and improved tomato seedling establishment.