Resistance to antifungal agents represents a major clinical challenge, leading to high morbidity and mortality rates, especially in immunocompromised patients. In this study, we screened soil bacterial isolates for the capability of producing metabolites with antifungal activities via the cross-streak and agar cup-plate methods. One isolate, coded S6, showed observable antifungal activity against Candida (C.) albicans ATCC 10231 and Aspergillus (A.) niger clinical isolate. This strain was identified using a combined approach of phenotypic and molecular techniques as Lysinibacillus sp. MK212927. The purified metabolite displayed fungicidal activity, reserved its activity in a relatively wide range of temperatures (up to 60 °C) and pH values (6–7.8) and was stable in the presence of various enzymes and detergents. As compared to fluconazole, miconazole and Lamisil, the minimum inhibitory concentration of the metabolite that showed 90% inhibition of the growth (MIC90) was equivalent to that of Lamisil, half of miconazole and one fourth of fluconazole. Using different spectroscopic techniques such as FTIR, UV spectroscopy, 1D NMR and 2D NMR techniques, the purified metabolite was identified as terbinafine, an allylamine antifungal agent. It is deemed necessary to note that this is the first report of terbinafine production by Lysinibacillus sp. MK212927, a fast-growing microbial source, with relatively high yield and that is subject to potential optimization for industrial production capabilities.