The isolation, biological characterization, and structure elucidation of xanthepinone, a novel antifungal metabolite isolated from the broth of submerged cultures of a soil fungus, are described. Xanthepinone inhibits the conidial germination of Magnaporthe grisea (2 microg/mL), Phytophthora infestans (5 microg/mL), and Botrytis cinerea (10 microg/mL) while showing only weak antibacterial activity; cytotoxicity was not observed up to 50 microg/mL. Molecular taxonomy revealed that the producing strain is close to species in the genus Phoma as well as to uncultured soil fungi and endophytes.