Keeping in view the vast potential of endophytic fungi to produce bioactive molecules, this study aimed at isolating and screening endophytes for the production of acetylcholinesterase inhibitors. Fifty-four endophytic fungi were isolated from Ricinus communis and screened for their AChE inhibitory activity using Ellman's colorimetric assay method. Six isolates were found to possess AChE inhibitory activity with maximum inhibition of 78 % being evinced by culture Cas1 which was identified to be Alternaria sp. on the basis of molecular as well as microscopic methods. Optimization of inhibitor production was carried out using one factor at a time approach. Maximum production of inhibitor was obtained on potato dextrose broth after 10 days incubation. The IC50 of the chloroform extract was observed to be 40 mu g/ml. The extract was purified on silica gel and eluted stepwise with a gradient of chloroform/methanol. The insecticidal potential of the extract was evaluated by feeding the larvae of Spodoptera litura on diet containing varying concentrations of the extract. It was observed that with increase in the concentration of the extract, mortality of the larvae increased. The culture has the potential of being exploited in medicine as well as a biocontrol agent.