Xylaria papulis Lloyd, an endophytic fungus, was isolated from the stem of Andrographis paniculata Willd., commonly known as green chiretta, which is native to India and Sri Lanka. To date, no report is available on the epigenetic modulation of X. papulis using the histone methyltransferase inhibitor UNC1999. Hence, this study aims to evaluate the independent effect of this probe. The fungal culture was evaluated for antioxidant (2,2-diphenyl-1-picrylhydrazyl and 2,2′-azino-bis(3-ethylbenzothiazoline-6-sulfonic acid radical scavenging assays) and antibacterial potential against six human pathogens: Staphylococcus epidermidis (ATCC 12223), methicillin-susceptible Staphylococcus aureus (MSSA) (ATCC 25923), methicillin-resistant Staphylococcus aureus (MRSA) (MU50), Enterobacter cloacae (ATCC 13047), Klebsiella pneumoniae (ATCC 700603), and E. coli (ATCC 25922). The crude extract, which was recovered from the samples treated with 250 nM of UNC1999, exhibited enhanced antioxidant and antibacterial efficacy against S. epidermidis (ATCC 12223), MSSA (ATCC 25923), MRSA (MU50), E. cloacae (ATCC 13047), and K. pneumoniae (ATCC 700603), compared to the control. The chemical profiles of crude extracts, both treated and untreated, were analyzed using gas chromatography–mass spectrometry and ultra-high-performance liquid chromatography along with high-resolution mass spectrometry). The results highlighted the capacity of UNC1999 to modulate the synthesis of cryptic metabolites in X. papulis, displaying antimicrobial and anticancer potential. This study underlines the importance of further research into the molecular mechanisms regulating these epigenetically modulated metabolic pathways.