Phialophora is a dematiaceous fungus isolated from soil and wood. Human infections including chromoblastomycosis, mycotic keratitis, cutaneous infections, and prosthetic valve endocarditis have been reported. We report a case of fatal hemorrhage due to Phialophora verrucosa in a patient with prolonged neutropenia undergoing autologous bone marrow transplant (BMT) for acute myelogenous leukemia (AML). Bacterial infections complicated induction and consolidation chemotherapies. Liposomal amphotericin B (LAMB) was given from day +33 to day +72 for febrile neutropenia. Death occurred on day +74 due to tracheal hemorrhage. Autopsy revealed granulation tissue on the posterior wall of the trachea with fungal hyphae on histopathology; the tissue grew Phialophora verrucosa. In vitro susceptibility studies revealed a minimum inhibitory concentration to AmB of 0.1 microg/ml. This represents the first reported case of invasive P. verrucosa in a BMT patient leading to fatal hemorrhage, despite large cumulative doses of LAMB to which the organism remained susceptible.