Twenty Four foliar endophytic fungal species were isolated from the living asymptomatic leaves of 37 medicinal plants from Bhadrachalam dry deciduous forest along the river Godavari of Khammam district, Andhra Pradesh, India. Morphotypes of mycelia sterilia are predominant among frequent fungal endophytes. Endophytes associated with Andrographis paniculata are more in number while Holorrhina antidysentrica supported minimum endophytic fungi. Species of Acremonium, Cladosporium, Curvularia, Alternaria and Colletotrichum were frequently isolated. Arthrinium phaeospermum is a rare and infrequent endophyte mostly isolated from Andrographis paniculata. Badarisima sojae, Emericella nidulans, Sordaria fimicola, Stachybotrys chartarum, Tretopileus sphaerophorus are the new endophytes reported for the first time. Among the 24 endophytic fungi, majority produced amylase (58%) followed by pectinase (45%) and protease (33%). None of the endophytes exhibited lipolytic or lignolytic activity. The results provide valuable information on endophytic fungal diversity from natural dry deciduous forest flora under the threat of inundation by the ongoing Polavaram irrigation project. Enzymatic ability of the endophytes suggests their potential use as novel agents for new drugs and other industrially important secondary metabolites.