Bioactive compounds of endophytic fungi exhibit antimicrobial, antioxidant, anticancerous, antiviral and insecticidal properties. They harbor inter or intra-cellular in the plants epidermal layer. They are the most potent microorganism in establishing interrelationship with plant without harming them or asymptomatically. They have the mechanism which enables them to establish association with the plant and produce similar bioactive compound as plant produce. This research paper focused on the isolation, production, screening and separation of exploitable bioactive compounds from the plants Bombex cebia and Argemone mexicana. Total 15 fungi were isolated from segments of the plants in which fungal isolate SR2 isolated from leaf of Bombex cebia, AMS2 and AMS3 isolated from stem of Argemone mexicana showed best antibacterial result against six bacterial strains of Ethyl acetate crude extract. SR2 showed maximum zone of inhibition (27mm) against B. subtilis, AMS2 showed maximum zone of inhibition against K. pnumoniae (21mm), AMS3 showed maximum zone of inhibition against K. pneumoniae and S. typhimurium (19mm).