Medicinal plants are known to be used for centuries which are still being used for their health benefits and are a valuable source for bioprospecting endophytes. These days medicinal plants are exploited for the isolation of plant-derived drugs as they are effective and have relatively less or no side effect, due to which medicinal plants are getting exhausted. Endophytes are ubiquitous organisms found in plant bodies that constitute an important component of microbial diversity. Endophytic fungi reside in the host plant without causing apparent symptoms of infection. Endophytes are gaining attention as a subject for research, medicinal, agricultural potential and application in plant pathology due to their benefits for the host plant in defense and development. The review reveals the importance of endophytic fungi from medicinal plants as a source of bioactive and chemically novel compounds.