Fermentation extracts of culture CR115, an unknown plant endophyte originally isolated from Costa Rica, were found to be active against antibiotic-resistant bacteria. The metabolite responsible for activity was identified as a novel diterpenoid antibiotic guanacastepene (mol. wt. 374.47 and mol. formula C22H30O5). Mechanistic studies done in an E. coli imp strain suggested membrane damage as the primary mode of bactericidal action. This compound also lysed human RBCs and caused leakage of intracellular potassium from E. coli imp.