Phyllostieta tabernaemontanae, a leaf spot fungus isolated from the diseased leaves of Wrightia tinctoria, showed the production of taxol, an anticancer drug, on modified liquid medium (M1D) and potato dextrose broth (PDB) medium in culture for the first time. The presence of taxol was confirmed by spectroscopic and chromatographic methods of analysis. The amount of taxol produced by this fungus was quantified using high performance liquid chromatography (HPLC). The maximum amount of taxol production was recorded in the fungus grown on M1D medium (461 ${mu}g$/L) followed by PDB medium (150 ${mu}g$/L). The production rate was increased to $9.2{ imes}10^3$ fold than that found in the culture broth of earlier reported fungus, Taxomyees andreanae. The results designate that P. tabernaemontanae is an excellent candidate for taxol production. The fungal taxol extracted also showed a strong cytotoxic activity in the in vitro culture of tested human cancer cells by apoptotic assay.