In order to search for naturally occurring bioactive metabolites from higher fungi, the group investigated the chemical constituents of more than 50 higher fungi in Southwest of China since last 5 years. More than 300 novel compounds including terpenoids, phenolics and nitrogen-containing compounds were isolated from basidiomycetes and ascomycetes. Some of them are pigments and toxins which showed very interesting pharmacological activities. More than 50 papers have been published in international journals. Several bioactive compounds are evaluating for their potential as drug candidates.