For combating multidrug-resistant microorganisms, exploration of natural compounds from plant endophytes increases the chance of finding novel compounds. An efficient bioactive metabolites producing endophytic fungal strain AE1 was isolated from leaves of Azadirachta indica A. Juss. The metabolites were found to be thermostable, non-proteinacious and produced prominent zones of inhibition against numbers of Gram positive and Gram negative bacteria. Based on 28S rDNA (D1/D2) sequence homology the isolate AE1 was identified as Alternaria alternata. Malt extract broth was found effective for the maximum production of bioactive metabolites by the isolate and was subjected for solvent extraction. The Ethyl acetate (EA) fraction of AE1 showed MIC values of 300-400 μg/ml against Gram positive and Gram negative bacteria tested. The cidal mode of action of EA fraction was detected by treating bacterial cultures at mid log phase. Scanning electron microscopic study supported morphological disintegration of bacterial cells. Release of nucleic acid, protein and potassium ions (K+) also suggested lysis of bacterial cells or leakage of cell membrane upon treatment. In addition, reduction of the activity of EMP pathway, TCA cycle and gluconeogenic enzymes in all bacteria suggested the interference of antibacterial principles with central carbohydrate metabolic pathways. Thin layer chromatographic separation followed by GC-MS analysis of EA fraction suggested numbers of antimicrobial compound production by AE1. In addition, DPPH free radical as well as superoxide radical scavenging assay also suggested strong antioxidant potential of AE1 with an IC50 value of 38.0±1.7 μg/ml and 11.38±1.2 μg/ml respectively. On the basis of above facts it can be concluded that the strain AE1 will be a good source of bioactive compounds having medicinal importance.