Antifungalmycin 702, a novel polyene macrolide antibiotic produced by Streptomyces padanus JAU4234, strongly inhibited mycelial growth of the rice blast fungus, Magnaporthe grisea, with EC50 of 37 mu g/ml and EC90 of 136 mu g/ml. Significant reduction in the number of conidia was observed at above 20 mu g/ml. Conidia germination and appressorium formation were also suppressed and were not viable with > 40 mu g/ml. When treated with antifungalmycin 702, hyphae morphology became irregular. Based on microscopic examination, antifungalmycin 702 may exert its antifungal activity by changing the structure of cell membranes and the cytoskeleton and interacting with the organelles. Antifungalmycin 702 thus has potential as a new fungicide in the treatment of rice blast disease.