Because of the earth-disrupting effects of synthetic (chemical) fertilizers, research has been on going to find safer alternatives that preserve soil health and assist in crop production. The potential of co-biochar (biochar enriched in beneficial microbial inoculants) has recently gained a lot of attention as an alternative way to reduce synthetic fertilizers and improve nutrient quality for crops. Co-biochar is produced from various organic sources including agricultural waste, animal manure and forestry refuse. This has a synergistic impact for improving the structure of soils, water holding capacity and microbe activity. The high porosities, surface areas and adsorption capacities of co-biochar explained retention of nutrients from which the beneficial ones are released only gradually and through time supported plant growth-promoting microbes. Thus, this chapter discusses how co-biochar affects microbes to increase fertilizer use efficiency, reduce nutrient losses and enhance various crop growth indices like yield, biomass and nutrient-density. The article also dives into the potential of co-biochar to mitigate greenhouse gas emissions, eutrophication, and soil degradation making it an attractive alternative for climate-smart agriculture as well as for health-conscious pathways to sustainability. Although co-biochar usage has some merits, it suffers a number of challenges including production costs, microbial survivability, scalability, and low farmer adoption. Thus, future prospects such as-designed biochar, precision microbial inoculants and combination with agroecological techniques are put forward in this manuscript. Furthermore, conducive policy, cross-disciplinary research and farmers’ enthusiasm is possibly needed to harness as much benefit as possible from co-biochar micro-organisms for sustainable agriculture.