Quinoline-5,8-diones have generated a lot of interest as anticancer agents, most of which were obtained by synthesis and only a few from microbial sources. In the course of screening for new antitumor bioactive compounds from microbial sources, a new cytotoxic quinoline-5,8-dione derivative, sannanine (1), was isolated from the fermentation broth of Streptomyces sannanensis. This paper reports the fermentation, isolation, structural elucidation and biological activities of 1. The producing organism was identified as S. sannanensis according to phylogenetic analysis of 16S rDNA and phenotypic properties. Fermentation was carried out in seed medium and fermentation medium. The completed fermentation broth was separated into filtrate and mycelium by centrifugation, and the culture filtrate was absorbed onto polymeric resin Amberlite XAD-16, then eluted with MeOH. The dried extract was extracted with petroleum, CHCl3 and EtOAC; the CHCl3 extract fraction was purified by Sephadex LH-20 gel chromatography, silica gel column chromatography and preparative HPLC to yield compound 1. Structural elucidation using 1D and 2D NMR, IR, MS and other techniques showed that compound 1 was 2,3-dimethyl-6-(methylamino)quinoline-5,8-dione, named sannanine, which is the first quinoline-5,8-dione derivative with methyl substituted on C-3. Cytotoxic activity evaluation via MTT assay showed that compound 1 exhibited cytotoxic effects on four human tumor cell lines (human gastric carcinoma cell line BGC-823, human pancreatic carcinoma cell line PANC-1, human hepatocellular liver carcinoma cell line HepG2 and human large-cell lung carcinoma cell line H460) with IC50 values of 6.6, 5.8, 3.1 and 1.8 μM, respectively.