Background: Jatropha curcas L. (Jatropha) is a potential biodiesel crop that can be cultivated on marginal land because of its strong tolerance to drought and low soil nutrient content. However, seed yield remains low. To enhance the commercial viability and green index of Jatropha biofuel, a systemic and coordinated approach must be adopted to improve seed oil and biomass productivity. Here, we present our investigations on the Jatropha-associated nitrogen-fixing bacteria with an aim to understand and exploit the unique biology of this plant from the perspective of plant-microbe interactions. Results: An analysis of 1017 endophytic bacterial isolates derived from different parts of Jatropha revealed that diazotrophs were abundant and diversely distributed into five classes belonging to alpha, beta, gamma-Proteobacteria, Actinobacteria and Firmicutes. Methylobacterium species accounted for 69.1 % of endophytic bacterial isolates in leaves and surprisingly, 30.2 % which were able to fix nitrogen that inhabit in leaves. Among the Methylobacterium isolates, strain L2-4 was characterized in detail. Phylogenetically, strain L2-4 is closely related to M. radiotolerans and showed strong molybdenum-iron dependent acetylene reduction (AR) activity in vitro and in planta. Foliar spray of L2-4 led to successful colonization on both leaf surface and in internal tissues of systemic leaves and significantly improved plant height, leaf number, chlorophyll content and stem volume. Importantly, seed production was improved by 222.2 and 96.3 % in plants potted in sterilized and non-sterilized soil, respectively. Seed yield increase was associated with an increase in female-male flower ratio. Conclusion: The ability of Methylobacterium to fix nitrogen and colonize leaf tissues serves as an important trait for Jatropha. This bacteria-plant interaction may significantly contribute to Jatropha's tolerance to low soil nutrient content. Strain L2-4 opens a new possibility to improve plant's nitrogen supply from the leaves and may be exploited to significantly improve the productivity and Green Index of Jatropha biofuel.