The secondary metabolites, helvolic acid and cerulenin were detected in liquid culture of Sarocladiumoryzae, causal agent of sheath rot of rice, and also in diseased sheath tissues. These metabolites were examined by thin-layer chromatography (TLC), column chromatography, and by high-performance liquid chromatography (HPLC). Helvolic acid and cerulenin showed the Rf value of 0.49 and 0.61, respectively using TLC. Cerulenin produced two spots in the TLC chromatogram and produced two major peaks in the HPLC chromatogram due to its instability. External application of helvolic acid and cerulenin produced lesions similar to those caused by the fungus. When infiltrated both of these metabolites caused electrolyte leakage in susceptible cultivar, IR 36 and induced lower levels of leakges in White Ponni, the moderately resistant cultivar to S. oryzae. The concomitant production of helvolic acid and cerulenin by S. oryzae in liquid culture and in planta was confirmed and the role of helvolic acid and cerulenin on the virulence of S. oryzae and sheath rot disease of rice is discussed.