In the process of screening for squalene synthase inhibitors from microbial fermentation products we have isolated a novel compound, named schizostatin (Fig. 1), from the culture broth of the mushroom, Schizophyllum commune SANK 17785. Schizostatin inhibited rat liver microsomal squalene synthase dose dependently and the IC50 value was 0.84 microM. The inhibition was competitive with respect to farnesylpyrophosphate with a Ki value of 0.45 microM.