This study was executed to investigate the potential of agar-agar, a nontoxic and non-degradable gelling agent, as a promising coating agent to improve and protect banana fruit against fungal postharvest diseases i.e., crown, finger, neck and flower end rots which are caused by fungal isolates of Colletotrichum musae and Fusarium moniliforme. Coated-ba-nana fruit samples with different concentrations of agar-agar suspension particularly at 2.0 g · l−1 exhibited a significant reduction in incidence and severity of postharvest diseases compared to untreated fruit. Banana fruits dipped in agar suspension at 2.0 g · l−1 for 5, 10 and 15 min showed significant reduction in disease incidence and severity. Moreover, application of agar suspension as a coating agent at 2.0 g · l−1 significantly decreased weight loss (%), firmness loss (%), and soluble solid concentration of banana fruit for 15 days at 25 ± 2°C. Scanning electron microscopy observation confirmed that the fruit coated with agar colloid at 2.0 g · l−1 had significantly fewer cracks and showed smoother surfaces than untreated fruit. This explains the quality improvement in agar-coated fruit compared to uncoated fruit. Overall, agar colloid, a safe coating agent, could be used to protect banana fruit against postharvest rot diseases and extend fruit storage life during ripening and storage.