About 60 different basidiomycete cultures were screened for antimicrobial secondary metabolitesrnin submerged culture grown in four different media. Ten (17%) of them produced antimicrobialrnsecondary metabolites. Production medium, duration of growth, and the most susceptible test organismsrnfor each producing strain were established. Among basidiomycetes screened for antimicrobial activity,rnthe culture filtrate extract of the Ethiopian strain of the polypore, Ganodemw lucidum produced thernmost effective antifungal compounds. The cu/~lral characteristics, growth in submerged culture of thernpolypore and isolation methods of the two antifungal antibiotics are described. Medium A (Yeast extractrnmalt extract glucose medium) was a better medium for the production of the two antifungal agents.rnThese compounds were released to the culture fluid and the maximum amount of antifungal compoundsrnis obtained after 12 days of submerged growth at 120 revolution per minute (rpm). TIle two antifungalrnmetabolites (20lA and 201B) isolated from culture filtrated were biologically characterized. TIlesernmetabolites had a wide spectrum of antifungal activity and affect the growth of several saprophytic asrnwell as pathogenic fungi. The minimal inhibitory concentration (MIG) of 20lA against Candida albicansrnand Candida pseudotropicalis was less than 1 mcg/ml and 1-5 mcg/ml respectively. Inhibition diameterrnzone of 36 mm was produced when 10 mcg/disc of 20lA was applied on agar medium seeded withrnAspergHlus flavus. 20lA was also a potent inhibitor of spore gemlination. No spores of Aspergillus nigerrnwere germinated at a concentration of 10 mcg/ml of the antibiotic. Bacteria were affected only at highrnconcentration.rnAntibiotic 20lA was more active than antibiotic 201B. A comparison of antifungal activity againstrndennatophytes showed that the efficacy of 20lA was comparable to griseofulvin. Treatment of sheeprnerythrocytes with the two antifungal antibiotics up to 100 mcg/disc did not show any lytic effect on sheeprnred blood cel/s. Application of 1 mg/1Ocm' of cn/de extract on a shaved rabbit skin showed norndemlatotoxic reactions.