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Melissa officinalis, commonly known as lemon balm, is vulnerable to drought stress and pathogenic diseases, including those caused by Fusarium species, which can significantly affect the plant’s growth and yield. This study investigated the potential of Funneliformis mosseae (Fm), Rhizophagus intraradices (Ri), and a combined inoculation (FmRi) to manage drought and Fusarium culmorum infection in lemon balm under greenhouse conditions using a completely randomized factorial design with three replications. Arbuscular mycorrhizal fungi (AMF) inoculation reduced disease severity caused by F. culmorum in leaves by 45.92% in Fm, 15.5% in Ri, and 21.34% in FmRi and in roots by 45.95% in Fm, 10% in Ri, and 12.78% in FmRi. However, higher drought levels, especially 25% pot capacity (25% PC), increased disease incidence (by 45%) compared to diseased plants without drought stress. Despite pathogen and drought stress, mycorrhizal symbiosis increased biomass production and photosynthetic pigment content in lemon balm. It also helped maintain higher relative water content (RWC%) in Fm-inoculated plants under 25% PC and pathogen stress, showing an increase of 13% compared with non-inoculated stressed plants. Furthermore, AMFs colonization declined hydrogen peroxide (H2O2) and malondialdehyde (MDA) production, indicating mitigation of oxidative stress and also, improved antioxidant enzymes activity in lemon balm under combined drought and pathogen stress. Concurrently, antioxidant enzyme activities were significantly enhanced in AMF-treated plants under stress conditions. Notably, Fm inoculation led to a significant increase in rosmarinic acid and salvianolic acid B accumulation by 1.55-, and 2.53-fold, respectively. Hierarchical cluster analysis (HCA) further confirmed that mycorrhizal colonization effectively mitigated damage caused by drought stress and F. culmorum infection (whether individually or combined) by increasing RWC and chlorophyll levels, detoxifying oxidative stress markers, and promoting the accumulation of rosmarinic acid and salvianolic acid B. Collectively, our findings demonstrate that mycorrhizal inoculation, particularly Fm, enhances the tolerance of lemon balm plants to drought and F. culmorum. This is achieved through boosting plant yield and RWC, suppression of oxidative damage, improving the antioxidant defense mechanisms, and increasing specific phenolic acids levels, ultimately contributing to improved plant health and productivity.