The morphological effects of CF66I, an antifungal compound produced by Burkholderia cepacia, on growing hyphae of Fusarium oxysporum were studied by fluorescence microscopy (FM) and transmission electron microscopy (TEM). At 20 μg/ml, CF66I strongly inhibited growth and induced significant changes of the hyphal morphology. These changes included swelling of hyphae with considerable thickening cell wall and abnormal chitin deposition, which was indicative of the alterations in cell wall structure. Furthermore, fluorescein diacetate (FDA) staining indicated the loss of intracellular esterase activity. CF66I probably inhibits fungal growth by interfering with the cell metabolic pathways. At 120 μg/ml, CF66I killed F. oxysporum (accompanied by propidium iodide permeation, intracellular cytoplasm leakage and crushing of hyphal tips), probably by direct damage to the cell membrane. Thus, there are two different antifungal mechanisms of CF66I, depending on its concentration, and further studies on this compound might be useful for us to develop a new class of antifungal agents.