The lignan podophyllotoxin (1) is highly valued as the precursor to clinically useful anticancer drugs. Substantial drug development of this compound class continues, including potential new use for inflammatory disease. We have isolated two endophyte fungi, both strains of Phialocephala fortinii, from rhizomes of the plant Podophyllum peltatum. The fungi were identified through DNA sequencing and morphology. Both strains of fungi are slow-growing and produce 1 at low but measurable amounts in broth culture. The compound was confirmed through matching HPLC retention times, absorption spectra, and MS data to authentic 1. The yield of 1 has ranged from 0.5 to 189 microg/L in 4 weeks of culture. These fungi have implications for the sustained production of 1 independent of wild populations of the source plants.