Xylocandin is a complex of novel peptides with potent antifungal activity that is produced by Pseudomonas cepacia ATCC 39277. The complex was isolated from the fermentation broth by extraction with butanol-methanol, 9:1, followed by collection of the precipitate formed upon concentration of the solvent extract. Purification was effected by chromatography on reversed phase and size exclusion gels followed by TLC on silica gel. These techniques afforded eight components: A1, A2, B1, B2, C1, C2, D1 and D2. A mixture of the two closely related components, xylocandins A1 and A2, displayed potent anticandidal and antidermatophytic activities in vitro. The activity was diminished by the presence of serum or vaginal washings. No antibacterial activity was demonstrable.