An antagonistic fungus inhibiting growth of various phytopathogenic fungi was isolated from greenhouse soils and identified. Mophological features of fruiting structures on potato dextrose agar and colorless globose to ovate heavy walled hyaline cells from the vegetative mycelium grown on MY20 agar indicate that this antagonist is Aspergillus terreus. The antagonistic activity is due to the production of antifungal compounds. An antifungal compound was purified from its culture filtrate using chloroform extraction, column chromatography, and thin layer chromatography. The purified antibiotic was effective to various phytopathogenic fungi and identified as butyrolactone I. $ED_{50}$ values measured by petri-plate assay through effective dosage(ED)-probit analysis were 9.7, 13.7, 23.3, 42.6 and 102.7 ppm on Botrytis cinerea, Rhizoctonia solani, Pythium ultimum, Phytophthora capsici, and Fusarium oxysporum, respectively.