In the search for potential cytotoxic substances produced by Nomuraea rileyi, an active compound was isolated from mycosed insects through an activity guided fractionation process. The compound, cytotoxic against the Sf9 insect cell line, was identified to be ergosterol peroxide (5α, 8α-epidioxy-24(R)-methylcholesta-6, 22-dien-3β-ol) using nuclear magnetic resonance techniques, infrared spectrometry, and mass spectroscopy. Anticancer screens demonstrated that ergosterol peroxide at micromolar concentrations inhibited the growth of hormone-dependent breast cancer cell line (T47D), hormone-independent breast cancer cell line (MDA-MB-231), human epidermoid carcinoma in mouth cell line (KB), human cervical carcinoma cell line (HeLa), lung cancer cell line (H69AR) and human cholangiocarcinoma cell line (HuCCA-1). Ergosterol peroxide showed moderate effects against Spodoptera litura larvae; 46.7% mortality via topical application after 7 day post-treatment whereas the insect's death was not found in per os application. The amounts of ergosterol peroxide produced by N. rileyi cultures under in vitro and in vivo were determined. The physiological levels of ergosterol peroxide detected in mycosed and mummified cadavers were very low (0.011 and 0.386 μg/larva) less then levels that either inhibited insect cell proliferation or caused insecticidal activity.