Conventional types of fertilizer such as chemical and synthetic fertilizers have demonstrated various adverse effects on the environment, crops, and humans. The utilization of plant probiotics as a bio-fertilizer in agriculture has been recognized to benefit the growth of the plant and inhibit the activity of plant pathogens. Traditional formulations of bio-fertilizer have provided insight into the beneficial use of microorganisms in crops. Despite its advantage to the environment, the effectiveness of traditional bio-fertilizer is common as compared to chemical fertilizer. Thus, a variety of bio-fertilizer formulations have been developed to improve the success rate of bio-fertilizer in increasing plant productivity. This review was focused on the development of bio-fertilizer formulation and the potential of bio-fertilizer to substitute chemical fertilizer application. In addition, this research review was also undertaken with a great demand on producing low cost and highly effective fertilizer without harming the environment and humans. Thus, the advantages and disadvantages of each formulation type have also been reviewed, emphasizing the perspective of bio-fertilizer and their suitability as bio-fertilizer as a substitute for chemical fertilizers in sustainable agriculture.