A novel bifunctional inhibitor (ATBI) from an extremophilic Bacillus sp. exhibiting an activity against phytopathogenic fungi, including Alternaria, Aspergillus, Curvularia, Colletotricum, Fusarium, and Phomopsis species, and the saprophytic fungus Trichoderma sp. has been investigated. The 50% inhibitory concentrations of ATBI ranged from 0.30 to 5.9 g/ml, whereas the MIC varied from 0.60 to 3.5 g/ml for the fungal growth inhibition. The negative charge and the absence of periodic secondary structure in ATBI suggested an alternative mechanism for fungal growth inhibition. Rescue of fungal growth inhibition by the hydrolytic products of xylanase and aspartic protease indicated the involvement of these enzymes in cellular growth. The chemical modification of Asp or Glu or Lys residues of ATBI by 2,4,6-trinitrobenzenesulfonic acid and Woodward's reagent K, respectively, abolished its antifungal activity. In addition, ATBI also inhibited xylanase and aspartic protease competitively, with K i values 1.75 and 3.25 M, respectively. Our discovery led us to envisage a paradigm shift in the concept of fungal growth inhibition for the role of antixylanolytic activity. Here we report for the first time a novel class of antifungal peptide, exhibiting bifunctional inhibitory activity.The primary current means for the identification of new antifungal agents are represented by screening of the vast biodiversity prevalent in natural resources such as soil samples, marine waters, insects, and tropical plants (6,8). The need for safe and effective antifungal agents has triggered considerable interest in the isolation of new compounds from biological resources. The rapid emergence of fungal pathogens resistant to currently available antibiotics has further compounded the dearth of novel antifungal agents. The past decade has witnessed a dramatic growth in knowledge of natural peptides from plants, animals, and microorganisms. These peptides play an important role in the protection of plants from invasive infection and could prove to be useful tools for the genetic engineering of fungal resistance in transgenic plants (40).Antifungal peptides are classified into two classes based on their mode of action (17). The first group acts by lysis, which occurs via several mechanisms (34). Lytic peptides may be amphipathic, having two faces, with one being positively charged and the other being neutral and hydrophobic. The second class of peptide interferes with the cell wall synthesis or the biosynthesis of essential components (14). The biological activities of a large number of peptide toxins have been rationalized in terms of the peptides' having the ability to adopt amphiphilic ␣-helical structures (15,16,21). Peptides are expected to have value as alternative agents in the fight against new resistant microbial strains as they have modes of action different from those of classical antibiotics. The characterization of such new antifungal and antimicrobial peptides and the design of analogues with improved activities have allowed better ...