Trichoderma asperellum strain T34 has been reported to control the disease caused by Fusarium oxysporum f.sp. lycopersici (Fol) on tomato plants. To study the importance of iron concentration in the growth media for the activity and competitiveness of T34 and the pathogen, we tested four iron concentrations in the nutrient solution [1, 10, 100, and 1000 µM provided as EDTA/Fe(III)] in a biological control experiment with T34 and Fol in tomato plants. The reduction of the Fusarium-infected shoot by T34 was only significant at 10 µM Fe. We hypothesized that Fe competition is one of the key factors in the biocontrol activity exerted by T34 against Fol, as an increase in Fe concentration over 10 µM would lead to the suppression of T34 siderophore synthesis and thus inhibition of Fe competition with Fol. T34 significantly reduced the populations of Fol at all the doses of Fe assayed. In contrast, Fol enhanced the populations of T34 at 1 and 10 µM Fe. Nevertheless, several plant physiological parameters like net CO2 assimilation (A), stomatal conductance (gs), relative quantum efficiency of PSII (ΦPSII), and efficiency of excitation energy capture by open PSII reactive centers (Fv′/Fm′) demonstrated the protection against Fol damage by treatment with T34 at 100 µM Fe. The first physiological parameter affected by the disease progression was gs. Plant dry weight was decreased by Fe toxicity at 100 and 1,000 µM. T34-treated plants had significantly greater heights and dry weights than control plants at 1,000 µM Fe, even though T34 did not reduce the Fe content in leaves or stems. Furthermore, T34 enhanced plant height even at the optimal Fe concentration (10 µM) compared to control plants. In conclusion, T. asperellum strain T34 protected tomato plants from both biotic (Fusarium wilt disease) and abiotic stress [Fe(III) toxic effects].