Genome mining of Ascomycete sp. F53 (F53), a fungal endophyte of the traditional Chinese medicinal plant Taxus yunnanensis (Chinese yew), revealed 35 putative specialized metabolite biosynthesis gene clusters, one of which encodes a rarely seen tandem polyketide synthase pathway with close homology to azaphilone biosynthesis pathways. A novel compound, lijiquinone 1, was subsequently isolated from F53 and structurally and functionally characterized. The m/z 385 [M + H+]+ compound, comprised of a cyclohexenone side group attached to a core bicyclic ring, displayed cytotoxicity against human myeloma cells (IC50 = 129 μM), as well as antifungal activity against Candida albicans (IC50 = 79 μM) and Cryptococcus albidus (IC50 = 141 μM). Our results suggest that enzymes encoded on the lij gene cluster are responsible for the synthesis of 1 and that the medicinal properties of T. yunnanensis could be partially mediated by this novel azaphilone. This study highlights the utility of combining traditional knowledge with contemporary genomic approaches for the discovery of new bioactive compounds.