Two novel antifungal compounds, 1 (SCH 466457), and 2 (SCH 466456), active in a "cell wall" assay, were isolated from the fermentation broth of an unidentified fungus. The active compounds were separated from the broth filtrate by adsorption on a macroreticular resin and were purified on reverse phase HPLC. Detailed mass spectrometric and NMR experiments and degradative studies helped in elucidating the structures of these compounds. The compounds were identified to be peptides containing amino acids such as alanine, aminoisobutyric acid, proline, leucine, valine, glycine and a previously identified beta-keto acid, 2-methyl 3-oxotetradecanoic acid. (5) Both compounds were active against Candida, dermatophytes and Aspergillus (Geometric Mean MIC's, 8.9, 20 and 16 microg/ml, and 64, 128 and 23 microg/ml, respectively for 1 and 2).