Sch 40873, a novel antifungal compound isolated from the fermentation broth of an Actinomadura spp. was discovered in an assay designed to detect compound with preferential activity against the invasive mycelial form of Candida albicans. The geometric mean MIC of Sch 40873 against seven Candida spp. in Sabouraud dextrose broth (yeast phase) was greater-than-or-equal-to 58-mu-g/ml and in Eagles minimum essential medium (mycelial phase) was < 0.03-mu-g/ml. Sch 40873 demonstrated slight in vivo topical activity in a hamster vaginal model.