The antifungal activity of chitosan, a bioplymer of β-1-4 gluscosamine, against Alternaria alternata, causal agent of black mold of tomato, was investigated. Chitosan was incorporated into potato dextrose broth (PDB) at concentrations of 100, 200, 400, 800, 1600, 3200, and 6400 μg·ml^–1, growth and toxin production by the fungus were assessed after a 15-day incubation period. Chitosan significantly affected both growth and toxin production at higher concentrations. However, at lower concentrations, toxin production was affected more than the growth, as evidenced by minimum inhibitory concentrations (MIC) of chitosan derived for toxin production and mycelial growth. Excess sporulation of the fungus was observed in the presence of chitosan, but the spore viability was affected. Chitosan induced aggregation of fungal cells, abnormal shape, excess branching, and hyphal contortion. It also induced leakage of proteins from the fungal cells. The virulence of the toxin in culture filtrate of the fungus from different concentrations of chitosan was assayed by administering on tomato discs. Phospholipid content, electrolyte leakage, xylanase, and pectin methylesterase activity were measured in the culture filtrate administered tomato tissue. Decreased trend in causing electrolyte leakage, phospholipid degradation, and activation of xylanase and pectin methylesterase were observed with increasing concentrations of chitosan. The results showed that chitosan inhibits fungal growth at higher concentrations than toxin production. Further toxin produced at lower concentrations of chitosan was less virulent. Thus chitosan has potential as an antifungal agent.