Phellinus caribaeo‐quercicola is a basidiomycetous fungus, isolated as an endophyte in this study from the healthy and symptomless leaves of Inula racemosa Hook. f., an important medicinal herb growing in Kashmir Himalaya. This study combines morphological, molecular and phylogenetic techniques to identify the fungal endophyte, using the ITS sequence of nrDNA. A detached leaf assay was conducted to assess the pathogenicity of the fungal endophyte suggesting its mutually symbiotic relationship with the host. The authors also investigated the antifungal potential of the isolated endophytic strain to ascertain its use as a biocontrol agent. The study shows that P. caribaeo‐quercicola INL3‐2 strain exhibits biocontrol activity against four key fungal phytopathogens that cause significant agronomic and economic losses: Aspergillus flavus, Aspergillus niger, Fusarium solani, and Fusarium oxysporum. Notably, P. caribaeo‐quercicola INL3‐2 strain is highly effective against A. flavus, with an inhibition percentage of 57.63%. In addition, this study investigates the antioxidant activity of P. caribaeo‐quercicola INL3‐2 strain crude extracts using ethyl acetate and methanol as solvents. The results showed that the methanolic fraction of P. caribaeo‐quercicola exhibits potential as an antioxidant agent, with an IC50 value of 171.90 ± 1.15 µg/mL. This investigation is first of its kind and marks the initial report of this fungal basidiomycete, P. caribaeo‐quercicola, as an endophyte associated with a medicinal plant. The findings of this study highlight the potential of P. caribaeo‐quercicola INL3‐2 strain as a dual‐action agent with both biocontrol and antioxidant properties consistent with the medicinal properties of Inula racemosa. This endophytic fungus could be a promising source of natural compounds for use in agriculture, medicine, and beyond.