The strain ANU 6277 was isolated from laterite soil and identified as Streptomyces sp. closely related to Streptomyces albidoflavus cluster by 16S rRNA analysis. The cultural, morphological and physiological characters of the strain were recorded. The strain exhibited resistance to chloramphenicol, penicillin and streptomycin. It had the ability to produce enzymes such as amylase and chitinase. A bioactive compound was isolated from the strain at stationary phase of culture and identified as 3-phenylpropionic acid (3-PPA) by FT-IR, EI-MS, 1H NMR and 13C NMR spectral studies. It exhibited antimicrobial activity against different bacteria like Bacillus cereus, B. subtilis, Escherichia coli, Klebsiella pneumoniae, Proteus vulgaris, Pseudomonas aeruginosa, P. flourescens, Staphylococcus aureus and some fungi including Aspergillus flavus, A. niger, Candida albicans, Fusarium oxysporum, F. udum and Penicillium citrinum. The antifungal activity of 3-PPA of the strain was evaluated in in vivo and in vitro conditions against Fusarium udum causing wilt disease in pigeon pea. The compound 3-PPA is an effective antifungal agent when compared to tricyclozole (fungicide) to control wilt caused by F. udum, but it exhibited less antifungal activity than carbendazim.