Seventeen endophytic fungi were isolated from various tissues of Cassia fistula and the ethyl acetate extracts obtained from 21-day cultures of all the endophytic fungal isolates were initially screened for their cytotoxicity against HeLa (human cervical carcinoma) cells using MTT assay. Of these, Penicillium sclerotiorum extract (PSE), significantly affected the viability of HeLa cells in a dose-dependent manner. The extract of P. Sclerotiorum was further analyzed by GC–MS, which showed three compounds, hexadecanoic acid, oleic acid and benzoic acid to be the major active principles in the extracts.The extract was further tested for invitro cytotoxicity against five cancer cell lines. Of the cell lines tested, HeLa cells showed maximum sensitivity followed by A549, while A431 and U251 were moderately sensitive and MCF-7 was insensitive to the treatment. In addition, normal human embryonic kidney cells, HEK293 remained insensitive to the treatment. Furthermore, the mechanism of cytotoxic activity exhibited by PSE was investigated by evaluating cell cycle progression and apoptotic induction in HeLa cells. Cell cycle analysis revealed that the PSE arrested cells at S and G2/M phase of the cell cycle in a dose-dependent manner. Annexin V- Propidium iodide double staining showed that, the extract potentiates apoptosis rather than necrosis in cells. This was supported by the down regulation in the proapoptotic protein BCL2 and up regulation of BAX (BCL2 Associated X), tumor suppressor protein, p53 and Apaf-1 [Apoptotic Peptidase Activating Factor 1]. Loss of mitochondrial membrane potential and a distinct DNA fragmentation pattern observed following the treatment, suggest that the PSE treatment leads to activation of mitochondrial pathway of apoptosis. Further, the extract also exhibited both antioxidant and anti-angiogenic properties. These results indicate that endophytic fungi isolated from medicinal plants may serve as potential sources of the anti-cancerous compounds.