In the screening for biological active compounds, the biotransformation processes catalyzed by filamentous fungi are useful because they can provide information about the possible appearance of toxic metabolites after oral administration and also generate new leads. In this paper, biotransformation of lapachol (1) by three fungal strains, Mucor circinelloides NRRL3631, Botrytis cinerea UCA992 and Botrytis cinerea 2100, has been investigated for the first time. Lapachol (1) was biotransformed into avicequinone-A (2) by M circinelloides, 3'-hydroxylapachol (3) by B. cinerea, and into dehydro-α-lapachone (4) by both fungi. All these compounds were evaluated for their cytotoxic activities. The metabolite 2 displayed non-selective cytotoxicity against tumor and normal cell lines, 3 did not show cytotoxicity against the same cells, while 4 showed higher cytotoxicity against cancer cell lines than lapachol (1). The transformation of 1 into harmless and reactive metabolites evidences the importance of the evaluation of drug metabolism in the drug discovery process. Antifungal potential of lapachol (1) and its metabolites 2 and 4 against B. cinerea has also been evaluated. Dehydro-α-lapachone (4) has been shown to be less toxic to fungal growth than lapachol (1), which indicates a detoxification mechanism of the phytopathogen.