Sch-642305 is produced by the endophytic fungi Phomopsis sp. CMU-LMA and exhibits both antimicrobial and cytotoxic activities. The incubation of Sch-642305 with Aspergillus niger ATCC 16404 resting cells leads to two unexpected thio conjugates. Compound (1) is formed by the addition of the cysteine metabolite 3-mercaptolactate to the double bond of Sch-642305. Compound (1) undergoes an intramolecular rearrangement to give compound (2), which contains two rings: a five-membered hydroxylactone ring and a five-membered thiophene ring. The absolute configuration of compound (1) is similar to that of the parent compound, but the configuration of the mercaptolactate side-chain was not determined. The absolute configuration of compound (2) was deduced from the crystal structure and confirmed by the anomal effect of the sulfur atom. To the best of our knowledge, this is the first time such a conjugation rearrangement reactions were observed. The biological significance and the reaction mechanisms are discussed. Compound (1) exhibits a weak antimicrobial activity against Gram-positive bacteria, whereas derivatives (1) and (2) showed an IC₅₀ of 1 and 1.2 μM, respectively, against colonic epithelial cancer cells.