Secreted, hormone-like lipogenic molecules, called oxylipins, mediate the balance of asexual to sexual spore ratio in Aspergillus nidulans. Oxylipin production in this fungus is dependent on developmental regulation of three conserved fatty acid oxygenases, PpoA, PpoB and PpoC. Here, we show that in addition to altering spore ratios, loss of ppo genes affect natural product biosynthesis and seed colonization. DeltappoA;DeltappoC and DeltappoA;DeltappoB;DeltappoC mutants were unable to produce the mycotoxin sterigmatocystin (ST) in vitro or in planta but in contrast overproduced the antibiotic penicillin (PN). These findings were correlated with decreased expression of genes involved in ST biosynthesis and increased expression of a PN biosynthetic gene, thus suggesting that oxylipin species regulate secondary metabolites at the transcriptional level. Additionally, the DeltappoA;DeltappoC and the DeltappoA;DeltappoB;DeltappoC mutants were defective in colonization of peanut seeds as reflected by a decrease in conidiation and production of the seed degradative enzyme lipase. These results indicate that oxylipin production is important for host colonization and mycotoxin production and may provide a promising target for future control strategies.