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The aim of the present study is to extract the bioactive compounds which can induce the apoptosis in breast cancer cell line MCF-7 by marine basidiomycetes. Internal Transcribed Spacer (ITS) sequences based molecular taxonomic study confirmed that collected the marine basidiomycetes belongs to <i>Fulvifomes</i> sp. Further, the isolated compounds from the <i>Fulvifomes</i> sp. confirmed as ergosterol peroxide (EP) by spectroscopic studies. The compound inhibited 50% of the cell growth (IC50) at the concentration of 40 &#181;g/mL and induced 90% cell death (IC 90) at the concentration of 80 &#181;g/mL. The ergosterol peroxide generated Reactive Oxygen Species (ROS) and induced apoptotic cell death in MCF-7. Ethidium bromide/Acridine Orange (Et/Br) staining showed the increased number of early and late apoptosis in treated MCF-7 cells. The compounds treated cells indicated the significant loss of mitochondrial membrane potential (&#916;&#968;m) with <i>p</i> &lt; 0.05. The induction of apoptosis by marine basidiomycetes derived ergosterol peroxide was confirmed by chromatin condensation in MCF7 cells using Hoechst staining 33342.