Hyphae from cultures of Fusarium avenaceum, a fungus associated with spruce budworm-infested balsam fir foliage, were toxic to spruce budworm larvae when ingested. The toxic principle isolated from hyphal extracts was identified as enniatin complex, rich in enniatin A/A 1 . A minor F. avenaceum product, ergosterol peroxide, caused damage to spruce budworm cell cultures, but did not display toxicity in feeding assays at the range of concentrations tested. Ecological implications of the presence of insecticidal fungi on the foliage of spruce budworm host-trees are addressed.The spruce budworm, Choristoneura fumiferana (Clemens), is a phytophagous insect, whose principal hosts are balsam fir, Abies balsamea (L.) Mill., and three spruce, Picea species, which together dominate the coniferous forests of eastern North America. Populations of the insect periodically irrupt to epidemic proportions, resulting in widespread destruction of susceptible host trees, with major ecological and recently, economic consequences. The outbreaks are followed by dramatic declines of the insect populations, and there is evidence indicating that, at least during the last two centuries, these oscillations have occurred quite regularly with a frequency of 30-40 years (]_, 2). A detailed understanding of the processes that cause the collapse of an epidemic spruce budworm population is a desideratum for both the ecologist and the forest manager, and intensive research on natural spruce budworm mortality factors is being conducted in several laboratories. The study described in this report originated in a suggestion that fungi colonizing the foliage of the spruce budworm 1 s host trees might produce toxic metabolites, adversely affecting the insects and possibly contributing to the decline of an outbreak population (E. Eveleigh, T. Royama, Canadian Forestry Service -Maritimes; D. B. Strongman, N. Whitney, Univ. of New Brunswick, unpublished discussions, 1984). This hypothesis receives some support from a growing literature on plant-fungal interactions that result in protection of the plant against the depredation of phytophagous insects and other herbivores (3,-6).