An endophytic fungus isolated from the plant Cinnamomum mollissimum was investigated for the bioactivity of its metabolites. The fungus, similar to a Phoma sp., was cultured in potato dextrose broth for two weeks, followed by extraction with ethyl acetate. The crude extract obtained was fractionated by high-performance liquid chromatography. Both crude extract and fractions were assayed for cytotoxicity against P388 murine leukemic cells and inhibition of bacterial and fungal pathogens. The bioactive extract fraction was purified further and characterized by nuclear magnetic resonance, mass spectral and X-ray crystallography analysis. A polyketide compound, 5-hydroxyramulosin, was identified as the constituent of the bioactive fungal extract fraction. This compound inhibited the fungal pathogen Aspergillus niger (IC50 1.56 μg/mL) and was cytotoxic against murine leukemia cells (IC50 2.10 μg/mL). 5-Hydroxyramulosin was the major compound produced by the endophytic fungus. This research suggests that fungal endophytes are a good source of bioactive metabolites which have potential applications in medicine.