Emerging resistance of fungal pathogens and challenges faced in drug development have prompted renewed investigations into novel antifungal lipopeptides. The antifungal lipopeptide AF3 reported here is a natural lipopeptide isolated and purified from Bacillus subtilis. The AF3 lipopeptide's secondary structure, functional groups, and the presence of amino acid residues typical of lipopeptides were determined by circular dichroism, Fourier transform infrared spectroscopy, and nuclear magnetic resonance spectroscopy. The lipopeptide's low minimum inhibitory concentrations (MICs) of 4-8 mg/L against several fungal strains demonstrate its strong antifungal activity. Biocompatibility assays showed that ~ 80% of mammalian cells remained viable at a 2 × MIC concentration of AF3. The treated Candida albicans cells examined by scanning electron microscopy, transmission electron microscopy, and atomic force microscopy clearly showed ultrastructural alterations such as the loss of the cell shape and cell membrane integrity. The antifungal effect of AF3 resulted in membrane permeabilization facilitating the uptake of the fluorescent dyes-acridine orange (AO)/propidium iodide (PI) and FUN-1. Using 1,6-diphenyl-1,3,5-hexatriene (DPH) and 4-(2-[6-(dioctylamino)-2-naphthalenyl] ethenyl)-1-(3-sulfopropyl) pyridinium inner salt (di-8-ANEPPS), we observed that the binding of AF3 to the membrane bilayer results in membrane disruption and depolarization. Flow cytometry analyses revealed a direct correlation between lipopeptide activity, membrane permeabilization (~ 75% PI uptake), and reduced cell viability. An increase in 2',7'-dichlorodihydrofluorescein diacetate (DCFH-DA) fluorescence demonstrates endogenous reactive oxygen species production. Lipopeptide treatment appears to induce late-stage apoptosis and alterations to nuclear morphology, suggesting that AF3-induced membrane damage may lead to a cellular stress response. Taken together, this study illustrates antifungal lipopeptide's potential as an antifungal drug candidate. KEY POINTS: • The studied lipopeptide variant AF3 displayed potent antifungal activity against C. albicans • Its biological activity was stable to proteolysis • Analytical studies demonstrated that the lipopeptide is essentially membranotropic and able to cause membrane dysfunction, elevated ROS levels, apoptosis, and DNA damage.