The purpose of this study was to assess the protective role of foliar application of melatonin on Capsicum annuum plants in Ni-contaminated soil system. C. annuum seeds (CM334) were grown in Ni (200 mg kg−1) contaminated soil-filled pots with two levels of melatonin (15 and 30 µM). The experiment was performed in five replicates per treatment under natural conditions. Soil Ni caused toxicity for plants and led to a significant decrease in plant growth (plant height, root length, plant fresh weight, and dry weight) as well as physiological attributes (photosynthetic rate, stomatal conductance, and transpiration rate) as compared to control. Likewise, Ni in the root zone negatively affected the total soluble proteins while total free amino acids, total soluble sugars, and activities of antioxidant enzymes got increased as compared to control plants. However, the foliar application of melatonin ameliorated the negative effects of Ni-stress on all the studied attributes of Capsicum. The treatment level of 30-µM melatonin appeared efficient under control and Ni toxicity. This study delivers detailed biochemical and physiological insights in understanding the role of different doses of melatonin in Ni tolerance in C. annuum. Significant correlations and principal component analysis were recorded between Ni uptake and Capsicum growth traits. Exogenous application of melatonin correlated with enhanced growth of C. annuum plants. Consequently, we inferred that melatonin can successfully lessen the hostile influence of Ni on growth of C. annuum and can be used as fertilizer. The cultivation of Capsicum in Ni-contaminated areas can be accelerated by using organic compounds like melatonin (as foliar agents) to curtail the opposing impacts of Ni on other food crops to impede the entry of Ni into the food chain.