Background: Pharmacological screening and usage of natural products for the treatment of human diseases has had a long history from traditional medicine to modern drugs. The majority of modern drugs are reported to be mostly from natural products. Objective: The aim of the present study was to evaluate the inhibitory activity of 5-(2,4-dimethylbenzyl) pyrrolidin-2-one (DMBPO) extracted from marine Streptomyces VITSVK5 spp. isolated from sediment samples collected at Marakkanam coast of Bay of Bengal, India. Methods: The lead compound was isolated by bioactive guided extraction and purified by silica gel column chromatography. Structural elucidation of the lead compound was carried out by using UV, FT-IR, 1H NMR, 13C NMR, DEPT and HR-MS spectral data. Results: Systematic screening of isolates for antimicrobial activity lead to identification of a potential strain, Streptomyces VITSVK5 spp. (GQ848482). Bioactivity guided extraction yielded a compound DMBPO and its inhibitory activity was tested against selected bacterial and fungal strains. DMBPO showed maximal activity against Escherichia coli with a MIC value of 187 μg/ml, followed by Klebsiella pneumoniae (MIC of 220 μg/ml and 10.3. mm zone of inhibition), Staphylococcus aureus (MIC of >1000 μg/ml and 4.4. mm zone of inhibition) and Bacillus subtilis (MIC of 850 μg/ml and 2.6. mm zone of inhibition). Furthermore, DMBPO was found to be a potent inhibitor of opportunistic fungal pathogens too. It showed a maximum activity against Aspergillus niger with a MIC value of 1 μg/ml and 28. mm zone of inhibition. Conclusion: The result of this study indicates that DMBPO possess antibiotic activity to selected bacterial and fungal pathogens and exhibited better activity against fungi than bacteria. © 2010 Revista Iberoamericana de Micología.