Streptomyces halstedii K122 was previously found to produce antifungal compounds on solid substrates that inhibit radial growth of fungi among Ascomycetes, Basidiomycetes, Deuteromycetes, Oomycetes, and Zygomycetes, and strongly affected hyphal branching and morphology. During growth of S. halstedii K122 in submerged culture, no antifungal activity could be detected. However, cultivation of S. halstedii in thin (1 mm) liquid substrate layers in large surface-area tissue culture flasks caused intense growth and sporulation of S. halstedii K122, and the biologically active compounds could be extracted from the mycelium with methanol. Antifungal compounds were purified using C18 solid phase extraction and silica gel column chromatography, and identified as bafilomycins B1 and C1, using 2D NMR and FAB MS. Production of bafilomycins, which are specific inhibitors of vacuolar ATPases, has not been reported from S. halstedii previously. Minimum inhibitory concentrations (MIC) of bafilomycins B1 and C1, amphotericin B, and nikkomycin Z were determined at pH 5.5 and 7.0 for the target fungi Aspergillus fumigatus, Mucor hiemalis, Penicillium roqueforti, and Paecilomyces variotii. Penicillium roqueforti was the most sensitive species to all the compounds investigated. The MIC values for amphotericin B were 0.5-4 micrograms.mL-1 for the fungi tested, and pH did not affect the toxicity. The MIC values for nikkomycin Z ranged from < 0.5 microgram.mL-1 for Mucor hiemalis to > 500 micrograms.mL-1 for Aspergillus fumigatus, and pH had no influence on toxicity. Bafilomycins B1 and C1 were equally active against the fungal species tested, with MIC values in the range of < 0.5-64 micrograms.mL-1. All fungi were more sensitive to both bafilomycin B1 and C1 at pH 7.0 than at pH 5.5.