A novel cytochalasin, L-696,47r4, (18-dehydroxy cytochalasin H) that inhibits HIV-1 protease was discovered in fermentations ofa bark-inhabiting Ascomycete, Hypoxylonfragiforme. The product was first identified from extracts of an agar medium.Fermentation studies on a numberof media indicated that the product can be made on several solid and liquid media. Optimumproduction was obtained from growth in a complex medium composed of glycerol, glucose, citrate, Ardamine, soybean meal, tomato paste, and inorganic salts. Other Hypoxylon spp., related species of Xylariales, and other fungi known to produce cytochalasins, were also surveyed for their ability to make L-696, 474. Only one other Hypoxylonfragiforme isolate was found to make this novel cytochalasin; none of the other cultures surveyed made L-696,474 or any other compoundswhich inhibit HIV-1 protease.The human immunodeficiency virus (HIV-1) is a retrovirus which causes acquired immunodeficiency syndrome (AIDS). HIV-1 protease has been identified as a potential therapeutic target to block the formation of infectious virus particles1}. During our screening of fungi for novel metabolites, an isolate of Hypoxylonfragiforme from Frost Valley, NewYork was observed to produce a novel cytochalasin which inhibits the HIV-1 protease; The purified compound, L-696,474, whose structure is shown in the accompanying paper2), has a molecular weight of 477 and an empirical formula of C3oH39N04. The cytochalasins are a group of fungal secondary metabolites which inhibit cell division and motility. These compounds are characterized by a highly substituted isoindolinone system, to which is fused a macrocyclic ring. The latter is either carbocyclic, a lactone or a cyclic carbonate. The cytochalasins have a phenyl group at position 10 while other similar compounds have indoyl or isopropyl groups at this position. Cytochalasins are distributed amongmanygroups of Ascomycotinaand/or their anamorphic stages, including the Xylariales, but are not found in bacteria or plants. These compounds have been extensively reviewed3'4).Wedescribe here the recovery from nature of the organism which produces the novel cytochalasin L-696,474, its identification, and comparative fermentation studies designed to optimize for production of this compound.Wealso report the results of a survey of other organisms, to determine if other cultures produce L-696,474 or similar cytochalasins, from among selected species of the Xylariales and other known cytochalasin-producing fungi. Details of the isolation, structure determination and biological properties of L-696,474 are considered in the following papers by Ondeyka et al.2) and Lingham et al5).