In the course of our continuing search for antimicrobial natural products produced by microorganisms collected in South China, we found that the EtOH extract from solid cultures of Streptomyces michiganensis strain SC0642 showed antifungal activity against Peronophythora litchii, one of the main pathogens causing litchi (Litchi chinensis Sonn.) fruit rot. Investigation of the secondary metabolites of this strain led to the isolation of two new quinazoline alkaloids, 2-(2-carboxyethyl)-8-hydroxyquinazolin-4(3H)-one (1) and 2-(2-carboxyethyl)-6-hydroxyquinazolin-4(3H)-one (2), as well as 2-(4-hydroxyphenyl)quinazolin-4(3H)-one (3)—a compound previously synthesized but obtained as a natural product for the first time. The structures of these compounds were elucidated using spectroscopic methods including HR-ESI-MS, UV, and NMR (1H, 13C, HMBC). Evaluation of compounds 1–3 for antifungal activity against P. litchii (via previously described methods) and cytotoxicity against KB and HL-60 cell lines (via MTT colorimetric assay) showed they were neither antifungal at concentrations up to 1.000 g/mL nor cytotoxic at concentrations ranging from 6.25 to 100 g/mL.