Six of the 2100 colonies of lactic acid bacteria isolated from 4 month old Cheddar cheese and raw buffalo milk showed antifungal activity against Aspergillus flavus IARI when tested by the well agar diffusion assay on Potato Dextrose Agar containing 0.1% Triton X-100. Out of these, the most promising isolate having a broad spectrum of antifungal activity including Aspergillus flavus IARI, A. flavus NCIM 555, A. parasiticus NCIM 898 and Fusarium spp. was identified as Lactococcus lactis subsp. lactis CHD-28.3. Among the mold cultures used as indicator strains, the most sensitive towards antifungal substance produced by the test culture was A. flavus IARI. The cell-free supernatant of the test culture in Elliker's broth adjusted to pH 6.8 produced an inhibition zone of 15-19 mm against A. flavus IARI, A. flavus NCIM555 and A. parasiticus NCIM898. The isolate when grown at 30 degrees C for 48 h in Elliker's broth showed optimum antifungal activity. When the supernatant was neutralized to pH 7.0 or 7.5, there was little reduction in activity. However, after enzymatic treatment of supernatant with chymotrypsin, trypsin and pronase E, the antifungal activity disappeared which indicated the proteinaceous nature of the antifungal substance.