Fungal endophytes are the critical organisms in the environment residing in the plant tissues without showing any harmful effects on its host life cycle. The finding of fungal endophytes in natural habitat has been insufficient due to some non-sporulating and non-culturable fungal endophytes by traditional method. Several investigations on fungal endophytes in plants have resulted in an excessive knowledge of the group. This review emphasis on the biology of fungal endophytes, their discovery, isolation, identification by morphological and molecular methods, production, purification and structure elucidation of the bioactive compounds.