A strain of bacterium producing antifungal antibiotic was isolated and identification of the strain was attempted. We could identify the bacterium as being a Bacillus sp., based on morphological observation, physiological characteristics, and 16S rDNA sequence analysis, thus leading us to designate the strain as Bacillus sp. AH-E-1. The strain showed potent antibiotic activity against phytopathogenic and human pathogenic fungi by inducing mycelial distortion and swelling and inhibiting spore germination. The antibiotic metabolite produced by the strain demonstrated excellent thermal and pH (2-11) stability, but was labile to autoclaving. From these results, we could find a broader antifungal activity of Bacillus genus. Isolation and characterization of the active agent produced by the strain are under progress.