The microbial transformation of anthranilic acid (1) by the marine-mudflat-derived fungus Thielavia sp. produced an antibacterial polycyclic quinazoline alkaloid, thielaviazoline (2). The stereostructure of the metabolite was assigned based on detailed spectroscopic data analyses including comparison of the NMR (H-1 and C-13) data with those of reported compound (2). Compound 2 displayed in vitro antimicrobial activity against methicillin-resistant and multidrug-resistant Staphylococcus aureus (MRSA and MDRSA), with minimum inhibitory concentrations (MICs) of 6.25 and 12.5 mu g/mL, respectively. Compound 2 also showed potent radical-scavenging activity against 2,2-diphenyl-1-picrylhydrazyl (DPPH) with an IC50 of 11 mu M, which was more active than the positive control, L-ascorbic acid (IC50, 20.0 mu M).