A marine actinobacterium isolated from the Bay of Bengal, India and previously found to be producing an antimicrobial and cytotoxic terpenoid was further investigated for antimicrobial metabolites. The bacterium was preliminarily identified as a new species of the genus Streptomyces (strain MS1/7). The cell-free culture broth was extracted with n-butanol and purified using silica gel column chromatography and high-performance liquid chromatography. Molecular characterization was done using ESI mass, IR and H-1 and C-13 NMR spectrometry. 2-Allyloxyphenol (MW 150; C9H10O2), a synthetic drug and chemical intermediate, was obtained as a natural product for the first time. Serendipitous natural occurrence provided new insights into the synthetic molecule. 2-Allyloxyphenol was found to be inhibitory to 21 bacteria and three fungi in the minimum range 0.2-1.75 mg mL(-1) determined by agar dilution method. 2-Allyoxyphenol possesses strong antioxidant property (IC50 22 mu g mL(-1), measured by 1, 1-diphenyl-2-picryl hydrazyl scavenging activity). Hydroxyl and allyloxy groups in 2-allyloxyphenol were responsible for antimicrobial and antioxidant activities. 2-Allyloxyphenol has marked resemblance to smoky aroma and is two to three times more active as an antimicrobial than some commercial smoke-flavour compounds. Absence of hemolytic toxicity, potential carcinogenicity, cytotoxicity and reports of toxic reactions in literature suggest possible application of 2-allyloxyphenol as a food preservative and an oral disinfectant.