The diversity of symbiotic fungi derived from two marine sponges and sediment collected off Obhur, Jeddah (Saudi Arabia), was investigated in the current study. A total of 23 isolates were purified using a culture-dependent approach. Using the morphological properties combined with internal transcribed spacer-rDNA (ITS-rDNA) sequences, 23 fungal strains (in the majority Penicillium and Aspergillus) were identified from these samples. The biological screening (cytotoxic and antimicrobial activities) of small-scale cultures of these fungi yielded several target fungal strains which produced bioactive secondary metabolites. Amongst these isolates, the crude extract of Aspergillus terreus strain S020, which was cultured in fermentation static broth, 21 L, for 40 days at room temperature on potato dextrose broth, displayed strong antimicrobial activities against Pseudomonas aeruginosa and Staphylococcus aureus and significant antiproliferative effects on human carcinoma cells. Chromatographic separation of the crude extract by silica gel column chromatography indicated that the S020 isolate could produce a series of chemical compounds. Among these, pure crystalline terrein was separated with a high yield of 537.26 ± 23.42 g/kg extract, which represents the highest fermentation production of terrein to date. Its chemical structure was elucidated on the basis of high-resolution electrospray ionization mass spectrometry (HRESIMS) or high-resolution mass spectrometry (HRMS), 1D, and 2D NMR spectroscopic analyses and by comparison with reported data. The compound showed strong cytotoxic activity against colorectal carcinoma cells (HCT-116) and hepatocellular carcinoma cells (HepG2), with IC50 values of 12.13 and 22.53 µM, respectively. Our study highlights the potential of A. terreus strain S020 for the industrial production of bioactive terrein on a large scale and the importance of future investigations of these strains to identify the bioactive leads in these fungal extracts.