Twenty-four endophytic fungal isolates recovered from Podocarpus gracilior were screened for Taxol biosynthetic potency. Among these endophytes, three isolates of Aspergillus terreus EFB108, EFB59, EFB14 recovered from P. gracilior cork, leaves and twigs, respectively, were reported as potent Taxol producers. The chemical identity of A. terreus extracted Taxol was verified from the HPLC, NMR and FTIR analyses, with strong cytotoxic activity for HEPG2 and MCF7 cell lines (IC50 4.5-6.5 nM). Upon nutritional of A. terreus EFB108 (MF377552), the maximum yield of Taxol (265 mu g/L) was obtained by growing the fungus on MID medium of initial pH 8.0, with 0.6% asparagine and 2.4% xylose, incubated for 21 days. Taxol yield of A. terreus was increased by similar to 2.4 folds (432 mu g/L) upon addition of surface sterilized P. gracilior leaves. The yield of Taxol by A. terreus was not affected by the dichloromethane plant extract negating the presence of direct signals inducing Taxol biosynthesis. So, the intimate physical interaction of endogenous endophytes of P. gracilior with the fungus, could be essential for triggering the biosynthesis of Taxol by A. terreus. This is the first report describing the feasibility of A. terreus, endophytes of P. gracilior, for Taxol production that could be a good industrial platform.