The invention relates to phytopathology, and particularly relates to endophytic fungi CEF-193 of cotton and application thereof. The bacterial strain CEF-193 (Acremonium alternatum) with a significant induced immune function on cotton verticillium wilt is obtained from the endophytic fungi of the cotton by separation, screening, identifying and biological assay of a greenhouse, the preservation number is CGMCC No.8302, and CEF-193 can be cultivated on an artificial medium, and is easily obtained and cultivated. Thus, industrialized production and popularization and application are facilitated. An indoor bacteriostatic test shows that the control effect on greensickness is good, verticillium dahlia is inoculated 4 days after the CEF-193 is firstly inoculated, the prevention and control effect on the cotton verticillium wilt achieves 74.1%, and the endophytic fungi CEF-193 have significant control action on the greensickness. Compared with the bacillus subtilis mainly applied to production, the prevention and control effect is improved by about 40%, and the endophytic fungi CEF-193 are safe on people and livestock, insects and crops, and friendly to environment.