Three different strains of the endophytic fungus Phomopsis were isolated from the healthy leaves of Taxus cuspidata (Japanese yew), Ginkgo biloba (ginkgo or maidenhair tree) and Larix leptolepis (Japanese larch) and screened for the production of taxol on a modified liquid medium for the first time. The presence of taxol was confirmed by spectroscopic and chromatographic analyses. The amount of taxol produced by this fungus was quantified by HPLC. The maximum amount of fungal taxol production was recorded as 418 microg/litre in the strain BKH 27. The yield was increased to 8360-fold that found for the fungus Taxomyces andreanae reported previously [Stierle, Strobel and Stierle (1993) Science 260, 214-216]. The fungal taxol extracted also showed a strong cytotoxicity towards the human cancer cells in an apoptosis assay. All the three isolates showed positive sign towards PCR for the conserved sequence of the taxadiene synthase gene. The results suggest that Phomopsis could be an excellent alternative source for taxol and may serve as a potential genetic-engineered species for the enhanced production of taxol.