Spent mushroom substrate (SMS) is a by-product remained after a crop of mushrooms. About seven thermophilic strains were isolated from SMS (Flammulina velvtipes). Among them, one isolate, designated UJ03, showed the antifungal activity against Aspergillus flavus and Aspergillus ochraceous producing mycotoxin on PDA medium, potentially. The strain UJ03 produced cellulase and xylanase as extracellular hydrolases. The strain UJ03 was identified as a member of the genus Bacillus by biochemical characteristics using Bacillus ID kit and VITEK 2 system. Comparative 16S rDNA gene sequence analysis showed that strain UJ03 formed a distinct phylogenetic tree within the genus Bacillus and was most closely related to Bacillus amyloliquefaciens with sequence similarity of 98.9%. On the basis of its physiological properties, biochemical characteristics and phylogenetic distinctiveness, strain UJ03 was classified within the genus Bacillus, for which the name Bacillus sp. UJ03 is proposed. The antifungal compound from Bacillus sp. UJ03 was similar to lipopeptide iturin A of Bacillus sp.