In a screening of fungal isolates associated with marine algae collected from Abou-keer, Alexanderia during the four seasons of 2004, to obtain new biologically active compounds. Varicosporina ramulosa isolate was identified and selected as a producer of 13 compounds. Out of 13 pure compounds produced, compounds 3 and 10 were considered as antibacterial and antifungal compounds, respectively as they were active against gram positive, gram negative bacteria and a fungus. Optimization of conditions (fermentation media, incubation period, temperature, initial pH, aeration levels) which activate compounds 3 and 10 production were studied. Also the spectral properties (UV, MS, GC/MS, IR and 1H-NMR) of the purified compounds were determined. Compound 3 suggested to be dibutyl phthalate and compound 10 may be ergosterol or one of its isomers. Biological evaluation of the two compounds towards 6 different types of tumor cell lines showed weak effect of compound 3 at different concentrations on the viable cell count of the different tumor cell lines. While compound 10 showed different activities against the viable cell count of the 6 different tumor cell lines. It kills 50% of the viable infected liver and lung cells at concentrations equal to 99.7 μg/mL, 74.9μg/mL, respectively. Compound 10 can be recommended as new anticancer compounds.