Trichoderma harzianum is a ubiquitously distributed asexual soil fungus that produces a variety of antibiotic compounds. Colonisation of soil inhabited by competing microbiota is facilitated by the antibiotic activity of these compounds. In addition, T. harzianum produces hydrolytic enzymes that degrade the cell wall components of many microorganisms, which can then be used as a source of nutrients. Recently, biotypes of T. harzianum differing morphologically from those originally described by Rifai were isolated on commercial mushroom (Agaricus bisporus) farms. These ‘aggressive’ biotypes cause devastating crop loss on mushroom farms. The aggressive biotype in North America was originally known as ‘Th4’ but has been recently renamed Trichoderma aggressivum f. aggressivum. In contrast, ‘non-aggressive’ biotypes, have no noticeable effect on the crop, are similar to T. harzianum and are commonly found on mushroom farms. The mechanism of disease establishment is unknown. We have identified a metabolite produced by T. aggressivum isolates in vitro that inhibits growth of A. bisporus and other fungi. This antifungal compound is not produced by ‘non-aggressive’ T. harzianum isolates under the culture conditions tested and is identified as 3,4-dihydro-8-hydroxy-3-methylisocoumarin. Another compound was isolated from both liquid culture and infested compost. Although its chemical structure could not be precisely determined, this compound also inhibits A. bisporus growth, is predominant in infested compost and likely has a inhibitory effect on the mycelia present in mushroom compost, resulting in devastating crop loss.