A fungal metabolite, BMS-182123, which inhibited bacterial endotoxin-induced production of tumor necrosis factor (TNF-alpha) in murine macrophages and human peripheral blood monocytes (in vitro), was isolated from the culture broth of Penicillium chrysogenum strain V39673. The effective BMS-182123 concentration (IC50) resulting in 50% inhibition of lipopolysaccharide-induced TNF-alpha production in murine macrophages and human monocytes was 600 ng/ml and 4.0 microgram/ml, respectively. BMS-182123 suppressed the lipopolysaccharide-induced TNF-alpha promoter activity and did not affect the stability of posttranscriptional mRNA. Addition of hydrophobic resin, Amberlite XAD-8 (1%), to the fermentation enhanced the production of BMS-182123 by 5.5 fold. A total of 577 mg pure BMS-182123 was recovered from a 250-liter fermentation supplemented with 1% Amberlite XAD-8.