Aspergillus terreus-18 ethyl acetate extract was chemically analyzed using High performance liquid chromatography (HPLC). This led to the isolation of the butenolide butyrolactone I (BL-1) which was identified using nuclear magnetic resonance (NMR) and mass spectra. As a major compound, BL-1 was tested for its antioxidant activity through its ability to scavenge the stable free radical 2,2-diphenyl-1-picrylhydrazyl (DPPH). It showed high scavenging activity with IC50 2.4 (µg/ml). A. terreus-18 local isolate was chosen among 18 other isolates screened for their DPPH scavenging activity. A.terreus-18 showed highest scavenging activity (% inhibition), 80.4± 1.35. The fungal isolate was then grown on different media under either shaked or static conditions. Aspergillus terreus-18 extract obtained from growth on malt peptone broth under static conditions showed highest scavenging activity, 85 %. Optimization of different physicochemical parameters to enhance bioactivity and increase the total phenolic content (TPC) of the promising isolate was done through response surface methodology (RSM). Statistical approaches led to 1.17 fold increase of DPPH scavenging activity, 99.5% inhibition. This was obtained upon using (g/L) malt extract, 25; peptone, 6 as fermentation media with initial pH, 7 and volume 50% media /flask (50% aeration) and using inoculum size 15% v/v of 60 h aged culture incubated statically for 18 days at temperature 27±2 °C. Extracellular TPC and antioxidant activity positively correlated where TPC increased from 122.475 to 290.51 mg gallic acid/g of tested extract.