Fungal endophytes were isolated from inner bark of Taxus baccata L., an important source of potent anticancer drug taxol. Bark samples were collected from two locations of Arunachal Pradesh, India, part of the Indo-Burma mega biodiversity hotspot, during two seasons i.e. monsoon and winter. Altogether 77 fungal strains representing 18 genera were isolated from T. baccata bark during the present investigation. The colonizing frequency was recorded as 38.5% and the fungal community comprised of 78% of Hyphomycetes, 5.2% of Coelomycetes, 2.6% of Zygomycetes and Ascomycetes and 9.1% of sterile mycelia. Most common and frequently isolated genera were Fusarium, Penicillium and Aspergillus. Simpson and Shannon diversity indices indicated higher species diversity during monsoon than during winter seasons irrespective of the locations. The two locations harbored 5 to 37 endophyte species and the similarity index was low during winter and high during monsoon. Ethyl acetate extract of fermentation cultures of these fungi were tested for their antimicrobial activity against a panel of human pathogenic Gram-positive and Gram-negative bacteria and fungi. Fifteen fungal isolates out of the isolated strains displayed antimicrobial activity. An endophytic fungus, identified as Fusarium sp. displayed significant antimicrobial activity against all the test pathogens.