A Periconia sp was isolated from Torreya grandifolia (a relative of yew that does not synthesize taxol) near Huangshan National Park in the People’s Republic of China. This fungus, not previously known as a tree endophyte, was isolated from the inner bark of a small lower limb. When freshly isolated from the tree and placed in a semi-synthetic medium, the fungus produced readily detectable quantities of the anticancer drug taxol. Other taxol-producing endophytes were also isolated from this source. The production of taxol by Periconia sp was demonstrated unequivocally via spectroscopic and immunological methods. However, successive transfers of the fungus in semi-synthetic medium resulted in gradual attenuation until low production occurred even though fungal growth was relatively unaffected. Several compounds, known previously as activators of microbial metabolism, including serinol, p-hydroxybenzoic acid, and a mixture of phenolic acids, were capable of fully or partially restoring taxol production to otherwise taxol-attenuated cultures. The compound with the most impressive ability to activate taxol production was benzoic acid at 0.01 mM. Benzoic acid was not a taxol precursor.