Background The endophytic fungus Penicillium is an important source of natural bioactive products. Persicaria salicifolia (Brouss. ex Willd) (family Polygonaceae) is a widely distributed plant on the Nile River and was reported to have several biological activities, such as antioxidative, antibacterial, and anti-inflammatory effects. Objective This study aimed to explore the potential activities (cytotoxic, anti-oxidant, and anti-microbial) of the endophytic fungus Penicillium funiculosum isolated from Persicaria salicifolia seeds growing in Egypt. Materials and methods The endophytic fungus Penicillium funiculosum was isolated from the seeds of the Persicaria salicifolia plant. The fungi were grown on Basmati rice as a solid media for the enhancement of pure fungi production. The collected fungi were extracted with ethyl acetate and fractionated using n-hexane and methanol. All fractions were examined for their cytotoxic, antioxidant, and antimicrobial activities. The secondary metabolites were isolated from the active fractions through column chromatography, and the isolated compounds were identified by spectroscopic technique. Molecular docking analysis was applied to the isolated compounds. Results and conclusion Ethyl acetate extract (Pf-2) of P. funiculosum was proved to have a highly potent antioxidant (IC50 37.5±0.70 μg/ml) and cytotoxic effects. It was affected on hepatic cancer (HepG-2), human colon carcinoma (HCT-116), lung carcinoma (A-549), and human breast cancer (MCF-7) cells with IC50 values (μg/ml) 4.26±0.2, 6.66±0.9, 9.36±0.3, and 9.41±0.7, respectively. Pf 2 was subjected to fractionation, resulting in four fractions (Pf 2–1 to Pf 2–4). The most potent cytotoxic fraction, Pf 2–2, was further fractionated into six sub-fractions: Pf 2–2 A to Pf 2–2 F. Pf 2–2 A possessed the most potent cytotoxic activity. The ethyl acetate extract (Pf 2) also had antimicrobial activity against gram-positive Bacillus subtilis and gram-negative bacteria (E. coli). Four compounds were isolated from Pf 2–2 A and identified by spectroscopic methods: NMR (1H and 13C) and Mass as (1) (9E, 11E, 13Z, 15Z)-tetracosa-9, 11, 13, 15-tetraenoic acid, (2) 3-(1Z, 3E-hexa-1, 3-dienyl)-4b-methyl-tetradecahydrophenanthrene, (3) mannitol, (4) d-Cerebroside A-glucose. It is the first time to report the isolation of compound (2) from the genus Penicillium and compounds (1, 3, and 4) from the species P. funiculosum. Compound 2 was the most potent cytotoxic one. Molecular docking was studied for polar compounds 1, 3, and 4 using the COX-2 enzyme, which indicated that compound 4 was the most potent anti-inflammatory one.