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Aims:  To examine and illustrate the morphological characteristics and growth kinetics of Cs‐HK1, a Tolypocladium fungus, isolated from wild Cordyceps sinensis in solid and liquid cultures, and the major chemical constituents and antitumour effects of Cs‐HK1 mycelium. Methods and Results:  The Cs‐HK1 fungus was isolated from the fruiting body of a wild C. sinensis and identified as a Tolypocladium sp. fungus. It grew rapidly at 22–25°C on a liquid medium containing glucose, yeast extract, peptone and major inorganic salts, with a specific growth rate of 1·1 day−1, reaching a cell density of 23·0 g dw l−1 in 7–9 days. Exopolysaccharides accumulated in the liquid culture to about 0·3 g l−1 glucose equivalent. In comparison with natural C. sinensis, the fungal mycelium had similar contents of protein (11·7–μg) and carbohydrate (654·6–μg) but much higher contents of polysaccharide (244·2 mg vs 129·5 mg), adenosine (1116·8–μg vs 264·6 μg) and cordycepin (65·7 μg vs 20·8 μg) (per gram dry weight). Cyclosporin A, an antibiotic commonly produced by Tolypocladium sp., was also detected from the mycelium extract. The hot water extract of mycelium showed low cytotoxic effect on B16 melanoma cells in culture (about 25% inhibition) but significant antitumour effect in animal tests, causing 50% inhibition of B16 cell‐induced tumour growth in mice. Conclusions:  The Tolypocladium sp. fungus, Cs‐HK1, can be easily cultivated by liquid fermentation. The mycelium biomass contained the major bioactive compounds of C. sinensis, and the mycelium extract had significant antitumour activity. Significance and Impact of the Study:  The Cs‐HK1 fungus may be a new and promising medicinal fungus and an effective and economical substitute of the wild C. sinensis for health care.

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