Fungal endophytes inhabiting the medicinal plants have been considered repertoire for bioactive metabolites. In the current study, the medicinal plant Polygala sinaica was used for the first time as a source for endophytic fungi, which were screened for novel bioactive compounds. The potent biologically active fungal isolate was morphologically identified and molecularly verified using 18S rDNA sequencing as F. oxysporum with accession # OR616565. Two compounds were isolated using flash chromatography, identified using GC/MS and NMR techniques, and quantified using HPLC. Identified compounds were bis-(2-ethylhexyl) phthalate (DEHP) (1) and dibutyl phthalate (DBP) (2) isolated for the first time from F. oxysporum. The ethyl acetate extract of F. oxysporum exhibited potent activity against different multi-drug resistant Gram-negative and Gram-positive bacteria and Candida tropicalis. The production of DEHP was studied in different modified Wickerham media, using oat flakes, rice, and tomato as carbon sources, while corn steep liquor (CSL) and soy protein were used as nitrogen sources. CSL-containing medium exhibited the highest DEHP production by F. oxysporum at an initial pH of 7.2, 0.1% inoculum size after 15 days of incubation under static conditions at 28 °C. The biosynthesis of DEHP by F. oxysporum would serve as an excellent safe and eco-friendly source for its production to be used medicinally and industrially on a large scale with less toxic effects. The current data brings insights into the potency of Fusarium oxysporum, an endophyte of Polygala sinaica, for the production of bis-(2-ethylhexyl) phthalate (DEHP) and dibutyl phthalate (DBP).