The immunomodulatory effects of three compounds designated BS, GS, and YS produced by Pestalotiopsis leucothës, an endophytic fungus isolated from Tripterygium wilfordii, were evaluated. The 50% inhibition concentration (IC₅₀) value of BS in the proliferative assay with various stimulating agents such as phytohemagglutinin-M (PHA-M), phorbol myristate acetate (PMA)/ionomycin, mixed lymphocyte reaction (MLR) and poke weed mitogen (PWM) was 0.35, 1.6, 0.8 and 5.4 μg/ml, respectively. In addition, BS significantly inhibited the production of cytokines such as interleukin (IL)-1β, IL-2, interferon (IFN)-γ and tumor necrosis factor (TNF)-α, by peripheral blood mononuclear cells (PBMNC) and soluble IL-2 receptor expression at concentrations greater than 1 μg/ml. Inhibition of PHA stimulated PBMNC proliferation and IL-2 and sIL-2R production by BS indicates that it is a T-cell specific immunosuppressant. However, BS also moderately inhibited immunoglobulin (Ig) G and M at concentrations greater than 1 μg/ml suggesting that it also has B cell immunosuppressive effects. YS was 10% less active than BS in all assay systems. In contrast, GS exhibited both suppression and enhancement of PBMNC proliferation in the presence of various stimulants. However, GS inhibited PWM stimulated PBMNC proliferation and IL-4 and IgG and IgM production at concentrations above 1 μg/ml. All three fungal compounds altered the percentage of T-lymphocyte subpopulations only at high concentrations. Cell viability was not affected at the immunosuppressive concentrations of these compounds. In conclusion, work from our laboratory has identified three potentially potent immunomodulatory compounds from P. leucothës. These compounds have variable effects on T- and B-cells and monocytes. They may partially explain the immunosuppressive activity of T. wilfordii. In addition, they may represent a new source of immunomodulatory compounds for the treatment of human immune mediated diseases.