A new pyridone alkaloid, (+)-N-deoxymilitarinone A (1), was isolated from Paecilomyces farinosus RCEF 0097 along with the related metabolites, militarinone D and militarinone B. The sterol 22E,4R-ergosta-7,22-diene-3beta,5alpha,6beta,9alpha-tetraol was also identified. The structures were established by spectroscopic methods, in particular with the aid of extensive NMR experiments. Compound 1 induced neurite sprouting in PC 12 cells when tested at 33 and 100 microM concentrations. A cytotoxic effect was observed in human neurons (IMR-32) at a concentration of 100 microM.