Twenty previously unknown compounds and two known metabolites, merulin A and merulin D, were isolated from the endophytic fungus Pseudolagarobasidium acaciicola, which was isolated from a mangrove tree, Bruguiera gymnorrhiza. Structures of the 20 compounds were elucidated by analysis of spectroscopic data. The absolute configuration of seven of these compounds was addressed by a single crystal X-ray analysis using CuKα radiation and an estimate of the Flack parameter. Three compounds also possessed a tricyclic ring system. Terpene endoperoxides isolated exhibited cytotoxic activity, while those without an endoperoxide moiety did not show activity. The endoperoxide moiety of sesquiterpenes has significant impact on cytotoxic activity, and thus is an important functionality for cytotoxicity. One terpene endoperoxide displayed potent cytotoxic activity (IC50 0.28μM), and selectively exhibited activity against the HL-60 cell line.