Water extracts from Nephroma arcticum were prepared and tested for inhibitory effects against various yeast, mould, blue-stain and rot fungi. A water extract from Peltigera aphthosa was used as a reference. Two different diffusion assays were used, wells (cupplate method) and droplets (drop-plate method). For the majority of fungi studied using the former method there were clear zones with a sharp boundary (fungicidal effect), whereas the latter method yielded more or less hazy zones with inhibition or reduction in growth (fungistatic effect). No clear or hazy zones were seen with the extract from P. aphthosa. For Candida glabrata E, Saccharomyces cerevisiae K and Hormonema dematioides S there were clear zones for both methods. The MIC (Minimum Inhibitory Concentration) values were determined in liquid medium for S. cerevisiae K and C. glabrata E and were, respectively, 1 and 10 mg ml−1 of a crude extract from N. arcticum. The MFC (Minimum Fungicidal Concentration) values were found to be identical to the MIC values.