Protein kinase C (PKC), a family of serine/threonine-specific kinases, plays a key role in cell growth, metabolism, and differentiation. Because the activated enzyme has been implicated in several disease processes, namely, cancer, inflammation, cardiovascular dysfunctions, diabetic complications, asthma, central nervous system disorders, and HIV infection, agents that inhibit PKC may prove to be of therapeutic value. In our search for novel and potent PKC inhibitors, we discovered balanol, an unusual metabolite produced by the fungus Verticillium balanoides. In this communication we describe the isolation, structure, and absolute stereochemistry of balanol. Balanol inhibits PKC in the low nanomolar concentrations.