Verticillium dahliae Kleb., the causal pathogen of vascular wilt, can seriously reduce the yield and quality of many crops, including cotton ( Gossypium hirsutum). To control the harm caused by V. dahliae, considering the environmental pollution of chemical fungicides and their residues, the strategy of plant nutrition regulation is becoming increasingly important as an eco-friendly method for disease control. A new compound micronutrient fertilizer (CMF) found in our previous study could reduce the damage of cotton Verticillium wilt and increase yield. However, there is little information about the mode of action of CMF to control this disease. In the present study, we evaluated the role of CMF against V. dahliae and its mechanism of action in vitro and in vivo. In the laboratory tests, we observed that CMF could inhibit hyphal growth, microsclerotia germination, and reduce sporulation of V. dahliae. Further studies revealed that the biomass of V. dahliae in the root and hypocotyl of cotton seedlings treated with CMF were significantly reduced compared with the control, and these results could explain the decline in the disease index of cotton Verticillium wilt. Furthermore, those key genes involved in the phenylpropanoid metabolism pathway, resistance-related genes defense, and nitric oxide signaling pathway were induced in cotton root and hypocotyl tissue when treated with CMF. These results suggest that CMF is a multifaceted micronutrient fertilizer with roles in inhibiting the growth, development, and pathogenicity of V. dahliae and promoting cotton growth.