The actinomycete strain KH-6l4 possessed strong antifungal activity, especially antagonistic to the rice blast fungus, Pyricularia oryzae. Diaminopimelic acid (DAP) type and morphological and physiological characteristics, examined by scanning electron microscopy (SEM), indicated that KH-614 belonged to the genus Streptomyces. Antifungal agent produced by this strain was found to be most active, when the strain was cultured in the presence of glucose, polypeptone, and yeast extract (PY) medium for 6 days at $27^{circ}C$. Based on the spectral report data, MS and NMR, the antifungal agent was identified as cyclo(L-leucyl-L-prolyl). According to the antimicrobial activity test measured by minimal inhibitory concentration (MIC), the cyclo(1eu-pro) exhibited the activity against Candida albicans IAM 4905, Mucor ramannianus IAM6218, Rhizoctonia solani IFO 6218, Aspergilus fumigatus ATCC 42202, Glomerella cingulata IFO 9767, Trichophton mentagrophytes ATCC 18749, and Trichophyton rubrum ATCC 44766, the order of MIC values were 50, 12.5, 5, 50, 25, 5, $5;mu extrm{g}/ml$, respectively. Specifically, cyclo(1eu-pro) was one of the most effective elements against Pyricularia oryzae IFO 5994 with the MIC value of $2.5;mu extrm{g}/ml$, thus indicating that cyclo(leu-pro) is a potential antifungal agent.