A novel sesquiterpene alcohol, named frabenol (1), was isolated from liquid cultures of Fimetariella rabenhorstii A20, an endophytic fungus of the agarwood-forming plant Aquilaria sinensis (Lour.) Gilg. The structure of the new compound was elucidated on the basis of spectroscopic methods. The finding of a sesquiterpenoid compound in F. rabenhorstii A20 implied that endophytic fungi of agarwood-producing plants could also contribute to the generation of fragrant chemicals during the agarwood formation processes.