A novel compound (named CF66I) produced by Burkholeria cepacia CF-66 strain was investigated for its antifungal activity against Candida albicans. This compound exhibited excellent antifungal activity in a dose- and time-dependent manner. Uptake analysis revealed that the compound preferentially acted against the fungal cell wall, and was also able to enter the cells. Transmission electron microscopy indicated that this compound caused loosening of the cell wall and a significant increase in the cell wall thickness was noted; however, no alterations were observed in the contents of the cell wall components. CF66I probably affected the normal assembly and integration of fungal cell wall components by interrupting the weak interactions between them, such as hydrogen and hydrophobic bonds. Propidium iodide (PI) staining indicated that on exposure to CF66I C. albicans cells became permeable to PI. Marked alterations in lipid and sterol contents were observed, and the major changes were a depletion of total lipids and ergosterol, concomitant with an increase in lanosterol content. These observations suggested that the novel compound CF66I may have considerable potential for development of a new class of antifungal agents.