Endophytic bacteria are the plant beneficial bacteria that thrive inside plants and can improve plant growth under normal and challenging conditions. They can benefit host plants directly by improving plant nutrient uptake and by modulating growth and stress related phytohormones. Indirectly, endophytic bacteria can improve plant health by targeting pests and pathogens with antibiotics, hydrolytic enzymes, nutrient limitation, and by priming plant defenses. To confer these benefits, the bacteria have to colonize the plant endosphere after colonizing the rhizosphere. The colonization is achieved using a battery of traits involving motility, attachment, plant-polymer degradation, and evasion of plant defenses. The diversity of endophytic colonizers depends on several bacteria, plant and environment specific factors. Some endophytic bacteria can have a broad host range and can be used as bioinoculants in developing a safe and sustainable agriculture system. This review elaborates the factors affecting diversity of bacterial endophytes, their host specificity and mechanisms of plant growth promotion. The review also accentuates various methods used to study endophytic communities, wild plants as a source of novel endophytic bacteria, and innovative approaches that may improve plant-endophyte association. Moreover, bacterial genes expressed in planta and challenges to study them are also discussed.