The essential oil was obtained from the broth of Eremothecium ashbyii H4565 by solvent extraction and steam distillation. The chemical components of essential oil were investigated by gas chromatography-mass(GC-MS) spectrometry. Antifungal activities were studied by inhibition zone method. Two fold dilution method was used to determine the minimum inhibitory concentration(MIC) and minimum bactericidal concentration(MBC). Cytoplasmic membrane permeability, protein and potassium ion leakage, and transmission electron microscope were used to determine antifungal mechanism. The results showed that the yield of essential oil was 0.54 g/L. Twenty two compounds, about 98.82% constituents of the total, were identified by GC-MS analysis. The essential oil was composed mainly of monoterpenes, sesquiterpenes, aromatic alcohol, and sesquiterpene hydrocarbons. The essential oil exhibited strong antibacterial activities against C. albicans, C. guilliermondii, C. tropicalis, C. glabrata, C. neoformans and S. cerevisiae. The MIC of the essential oil against these microorganisms were 31.25, 31.25, 62.5, 31.25, 15.625 and 15.625 μg/mL, respectively. The MBC of the essential oil against these microorganisms were 62.5, 62.5, 125.0, 62.5, 31.25 and 31.25 μg/mL, respectively. Based on analyses of cytoplasmic membrane permeability, protein and potassium ion leakage and transmission electron microscope, the possible targets of the essential oil were cell wall and cytoplasmic membrane. The results showed a new light on development and application of the essential oil from microorganism.