In this study, endophytic fungi were isolated from Dioscorea zingiberensis C.H. Wright (DZW), and a novel clean process to prepare diosgenin from DZW was developed. A total of 123 strains of endophytic fungi were isolated from different plant tissues of DZW. Among them, the strain Fusarium sp. (CPCC 400709) showed the best activity of hydrolyzing steroidal saponins in DZW into diosgenin. Thus, this strain was used to prepare diosgenin from DZW by solid-state fermentation. The fermentation parameters were optimized using response surface methodology, and a high yield of diosgenin (2.16%) was obtained at 14.5% ammonium sulfate, an inoculum size of 12.3%, and 22 days of fermentation. Furthermore, the highest diosgenin yield (2.79%) was obtained by co-fermentation with Fusarium sp. (CPCC 400709) and Curvularia lunata (CPCC 400737), which was 98.9% of that obtained by beta-glucosidase pretreated acid hydrolysis (2.82%). This process is acid-free and wastewater-free, and shows promise as an effective and clean way to prepare diosgenin for use in industrial applications from DZW.