ABSTRACT: BACKGROUND: Costus speciosus (Koen ex.Retz.) Sm (Costaceae) is an Indian ornamental plant which has long been used medicinally in traditional systems of medicine. The plant has been found to possess diverse pharmacological activities. Rhizomes are used to treat pneumonia, rheumatism, dropsy, urinary diseases, jaundice, skin diseases and leaves are used to treat mental disorders. METHOD: Antibacterial and antifungal activities were tested using Disc diffusion method and Minimum Inhibitory Concentration (MIC). Column chromatography was used to isolate compounds from hexane extract. X-ray crystallography technique and GC-MS analysis were used to identify the compounds RESULTS: Antibacterial and antifungal activities were observed in hexane, chloroform, ethyl acetate and methanol extracts. Hexane extract of C.speciosus showed good activity against tested fungi also. Two sesquiterpenoid compounds were isolated (costunolide and eremanthin) from the hexane extract. Both the compounds did not inhibit the growth of tested bacteria. But, both the compounds inhibited the tested fungi. The compound costunolide showed significant antifungal activity. The MIC values of costunolide were; 62.5 mug/ml against Trichophyton mentagrophytes, 62. mug/ml against T. simii, 31.25 mug/ml against T. rubrum 296, 62.5 mug/ml against T. rubrum 57, 125 mug/ml against Epidermophyton floccosum, 250 mug/ml against Scopulariopsis sp, 250 mug/ml against Aspergillus niger, 125 mug/ml against Curvulari lunata, 250 mug/ml against Magnaporthe grisea. CONCLUSION: Hexane extract showed promising antibacterial and antifungal activity. The isolated compound costunolide showed good antifungal activity.