A highly potent inhibitor of calmodulin-sensitive phosphodiesterase (PDE) activity was isolated from the culture broth of an unidentified fungal isolate, SCF-125. A chemically defined medium was developed for production of this compound. The PDE inhibitor was isolated from the fermentation filtrate by adsorption on a macro-reticular resin and further purified by gel filtration chromatography and reverse-phase HPLC. The major PDE inhibitor was identified as cephalochromin, a bis-naphthopyrone, by spectral data analysis. The compound, SCH 45752, inhibited calmodulinsensitive PDE activities with IC₅₀ values of 40-47nM. It inhibited the activities of calmodulin-independent PDE and various protein kinases with higher IC₅₀ values (2-40 μM). SCH 45752 does not appear to be a calrnodulin antagonist. Furthermore, SCH 45752 affects smooth muscle contraction at a concentration of 30 μM; it potentiated the relaxing effect of sodium nitroprusside on carotid artery media contracted by histamine. Thus SCH 45752 is one of the most potent inhibitors of calmodulin-sensitive PDE activity known, and it is capable of exerting a pharmacological effect in at least one intact tissue model.