The ethanolic extract of Calocedrus macrolepis var. formosana heartwood was screened for antifungal compounds by agar dilution assay and liquid chromatography. Two compounds, beta-thujaplicin and gamma-thujaplicin, responsible for the antifungal property of C. macrolepis var. formosana heartwood were isolated by high performance liquid chromatography (HPLC), and identified by 1H NMR and 13C NMR. The antifungal activities of these two compounds were further evaluated against total 15 fungi, including wood decay fungi, tree pathogenic fungi and molds. The hexane soluble fraction showed the strongest antifungal activities among all fractions. beta-Thujaplicin and gamma-thujaplicin exhibited not only very strong antifungal activity, but also broad antifungal spectrum. The MIC values of beta-thujaplicin and gamma-thujaplicin were in the range of 5.0-50.0 microg/ml. In addition, scanning electron microscopy (SEM) was carried out to study the structural change of fungal hyphae induced by beta-thujaplicin. Strong cell wall shrinkage indicated the fungicidal effect could be attributed to the combined actions of metal chelating and cytoplasm leakage. It also suggests that the role of metal chelating is indispensable in the design of environmental-friendly fungicides.