Today, the issue of crop yield and quality is one of the many challenges facing societies. Residues of pesticides, chemical fertilizers, hormonal compounds, and preservatives have caused many environmental issues. It is necessary to reduce these environmental crises by paying attention to the development of sustainable agriculture. Seed coating is considered one of the best methods to promote sustainable agriculture where the physical and physiological properties of seeds can be improved to facilitate planting, increase growth indices and alleviate abiotic and biotic stresses. Several methods of seed coating (e.g., dry powder coating, seed dressing, encrusting, seed pelleting, and film coating) are used to attain good application uniformity and adherence in the seed coating process. Seed coating has been tested in seeds of various plant species (e.g., vegetables, medicinal and other plants with small seeds) with different dimensions, forms, textures, and germination types. Plant beneficial microorganisms (PBM), such as rhizobia, bacteria, and fungi inoculated via seed inoculation can increase seed germination, plant performance and tolerance across biotic (e.g., pathogens and pests) and abiotic stress (e.g., salt, drought, and heavy metals) while reducing the use of agrochemical inputs. In this review, the microbial seed coating process and their ability to increase seed performance and protect plants from biotic and abiotic stresses are well discussed and highlighted in sustainable agricultural systems.