We isolated a cyclic lipodepsipeptide, phomafungin, from a Phoma sp. The distinct antifungal activity of phomafungin in the crude extract was initially discovered by mechanistic profiling in the Candida albicans fitness test. The purified compound contains a 28 member ring consisting of eight amino acids and a beta-hydroxy-gamma-methyl-hexadecanoic acid, and displays a broad spectrum of antifungal activity against Candida spp., Aspergillus fumigatus and Trichophyton mentagrophytes with MIC of 2-8 microg/ml, and toxicity to mice at 25 mg/kg. The linear peptide derived from opening of the lactone ring was devoid of antifungal activity as well as toxicity. Phomafungin has been identified in a number of Phoma spp. collected from Africa and the Indian and Pacific Ocean islands.