An endophytic fungus producing 1,8-cineole from Neolitsea pulchella (Meissn.) Merr. was identified as Annulohypoxylon sp. by phylogenetic analyses of the sequence alignments of ITS rDNA, β-tubulin, This isolate produces an attractive spectrum of volatile organic compounds (VOCs) with only one dominant component, 1,8-cineole, as identified by gas chromatography-mass spectrometry (GC-MS). The fungus was able to grow in seven media with different carbon sources, and five raw agro-forest residues. The content of 1,8-cineole in the mixed VOCs via fungus reached up to 94.95% and 91.25% relative area in PDA and raw poplar sawdust, respectively. Under optimum test conditions, the fungus produced 1,8-cineole at the 0.764 ppmv in 50 mL head spaces in PDA. Interestingly, 1,8-cineole is an ideal fuel additive for both diesel and gasoline engines. Also, this is the first isolate, in this group of fungi, making cineole, which produces as its primary VOC product which makes it an ideal organism for strain improvement. Such as step will be critical for its ultimate use in biofuel production.