Endophytic fungi isolated from medicinal plants represent a potent biotechnological source for production of bioactive natural substances. This study aimed to estimate the diversity and anti-dermatophytic activity of the endophytic fungi associated with Centaurea cineraria and Artemisia judaica cultivated in Botanical Garden of Faculty of Science, Assiut University. Nineteen species belonging to eleven fungal genera were isolated from the studied plants using Potato Dextrose Agar (PDA) and Czapek's Cellulose Agar (CCA) media. The maximum endophytic fungal count was observed on leaf samples of A.judaica accounting 44 and 38 CFU/125 leaf segments on PDA and CCA media, respectively. In contrast, the leaf samples of C. cineraria showed the widest fungal spectrum contributing 8 genera and 12 species on PDA medium and 7 genera and 9 species on CCA medium. Aspergillus, Penicillium, Chaetomium and Cladosporium were the most prevalent fungi. Ascotricha lusitanica was firstly recorded in Egypt from C. cineraria and was identified morphologically and by gene sequencing. The obtained sequences were deposited in the GenBank under accession number MT256115.The isolated fungi were screened for their abilities to produce antimicrobial secondary metabolites against dermatophytes (Microsporum canis, Trichophyton rubrum and T. mentagrophytes) using dual culture technique. A. lusitanica showed the highest suppressive impact against the tested dermatophytes. In conclusion, this study demonstrated that the endophytic A. lusitanica is considered a promising source of antimicrobial natural products involved in the pharmaceutical applications.