A new strain ofActinomycete (S. albovinaceus) no.10/2 with a broad antifungal and antibacterial activitywas isolated from soil sample of Palestine.The medium composition for antibioticproduction fromstrain S.albovinaceus was optimized using shake-flask methodology.The parameters that resulted in maximum antibiotic production are: 1.25 % mannitol and 1 % malt extract were found to be best carbon and nitrogen sources respectively for growth and antifungal and antibacterial production. Similarly initial pH of 7.2, 10 % level of inoculum, incubation period of 96 hrs, and agitation in 250 ml bottom indented flask and medium to flask ratio of 1:10 (aeration) were found to be optimal.Optimization of medium and cultural conditions resulted in good increase inantifungaland antibacterial yield.This is one of the first reports for strain no.10/2 (S. albovinaceus) reported from Palestine soil with antibacterial and antifungal activities.