The genetic diversity of fungal endophytes in root, bark and twigs of four medicinally important plants, Azadirachta indica, Holarrhena antidysenterica, Terminalia arjuna and T. chebula were examined. Thirty isolates of Pestalotiopsis and two isolates of Bartalinia robillardoides were genotypically compared by RAPD techniques and 241 reproducible polymorphic bands were obtained using 23 random primers. The data was subjected to unweighted pair-group (UPGMA) cluster analysis. The isolates grouped into four main clusters and subgroups, group I contained 12 isolates, group II contained 3 isolates of P. virgatula, group III contained 10 isolates including P. microspora, B. robillardoides, P. theae and Pestalotiopsis spp., group IV contained five isolates of P. microspora and finally one Pestalotiopsis spp. did not fall into any group. The ethyl acetate extracts of isolates from Terminalia arjuna showed greater antifungal activity than those from other medicinal trees against six test organisms viz., Alternaria carthami, Fusarium oxysporum, Fusarium verticilloides Macrophomina phaseolina, Phoma sorghina and Sclerotinia sclerotiorum, with the zone of inhibition ranging from 4 to 25 mm in diameter. The results indicate that RAPD can be employed for detecting genetic diversity of Pestalotiopsis species from medicinal plants and for pre-selection of these isolates for bioactive screening programme.