Root-knot nematodes (Meloidogyne spp.) are the most economically damaging plant parasitic nematodes, due to both their worldwide distribution and extensive host range. Fungal biocontrol is a rapidly developing research area, and there is growing interest in the exploitation of fungi for controlling root-knot nematodes. In this study, two nematode trapping fungi, Arthrobotrys dactyloides and Arthrobotrys oligospora, isolated from Queensland soils, were encapsulated in kaolin-alginate granules. Their efficacy for controlling root-knot nematodes was assessed by applying these granules into heated and non-heated field soil in a soil microcosm experiment. After applying the granules, significantly less root-knot nematodes were recovered from both heated and nonheated soils than from control treatments, which indicated that both fungi have biocontrol potential to supress root-knot nematodes. Compared to control treatments, granule application of both fungi reduced nematode numbers by a greater extent in the heated soil than the non-heated soil. This may have been due to biological factors in the field soil that affected the biocontrol efficacy of the nematode trapping fungi, such as competition for nutrients or predation by other microorganisms. Further research is required to understand the interactions between these fungal granule products and other microorganisms in the field soil to improve their efficacy for controlling root-knot nematodes under natural field conditions.