By means of spectral and chemical studies the structure of Grahamimycin Al 1, a novel macrocyclic dilactone antibiotic from Cytospora, is established. As part of a program investigating fungi of the genus Cytospora as a source of novel biologically active substances, we observed that aerobically grown cultures of one isolate of Cytospora, a saprophytic fungus from lodge pole pine [Pinus contorta var. Latifolia Engelm]' designated as Cytospora sp. Ehrenb W.F.P.L. (Western Forest Products Laboratory, Vancouver, B.C., Canada) 13A (ATCC 20502), exhibited antibacterial activity in a modified disc-zone assay2 against a variety of pathogenic microorganisms including species of Bacillus, Pseudomonas, Salmonella, Staphylococcus and Strepococcus. Preliminary investigations demonstrated that the antimicrobial activity of these cultures could be completely extracted into organic solvents. From these extracts we have obtained an antimicrobially active, bright yellow, dilactone-dione which we have designated Grahamimycin A1 1. Cultures of the fungus were grown aerobically at 23-34'C in a potato extract-dextrose medium for 9 days, at which time antimicrobial activity reached a maximum level. Essentially all of the antimicrobial activity could be extracted from the culture broth and mycelial material with chloroform. The chloroform extracts of both the culture broth and mycelial material were combined and concentrated to a small volume, then precipitated by pouring into a large volume of petroleum ether which removed inactive oily material. The precipitate was taken up in ether which separated an inactive solid residue, concentrated to a small volume