The microbial inoculant ‘Effective Microorganisms’ (EM) has been used to promote soil fertility and plant growth in agriculture. We tested effects of commercial EM products on suppression of soil-borne diseases, microbial activity and bacterial composition in organically managed sandy soils. EM was supplied as microbial stock suspension and fermented organic matter (EM-bokashi). Bioassays for soil-borne disease incidence were conducted with a naturally infested soil and inoculated disease-free organically managed nonamended soils or the same soils amended with EM-bokashi or sterilized EM-bokashi. Soil respiration analysis and denaturing gradient gel electrophoresis (DGGE) were performed to determine microbial activity, and bacterial composition and diversity. Disease incidence of cucumber plants was not affected by EM-bokashi but reduced by sterilized bokashi compared to the control in naturally infested soil. Pythium ultimum damping-off of cucumber in inoculated soil was enhanced by EM-bokashi and sterilized bokashi compared to the control. In one of three soils, infection of carrot by Rhizoctonia solani was reduced by EM-bokashi compared with sterilized bokashi. Soil respiration increased one week after soil amendment with EM-bokashi and sterilized EM-bokashi compared to the control, but not seven weeks later. DGGE showed that two batches of EM products had different microbial communities and soil amendment with EM-bokashi or sterilized EM-bokashi did not change the bacterial community and diversity in two soils. The added microorganisms in EM were possibly outcompeted and did not affect the existing bacterial community. We conclude that EM did not consistently suppress soil-borne diseases or change microbial activity and bacterial composition and diversity.