An efficient method of solid-state fermentation (SSF) is reported for producing bioactive phenolic compounds using soil-isolated fungi. Antioxidant activity using a rapid DPPH (1,1-diphenyl-2-picryl hydrazyl), was employed to screen the 120 fungal isolates from soil. Aspergillus terreus 1, Aspergillus fumigatus, Aspergillus terreus 2, Penicillium citrinum, Aspergillus wentii1, Aspergillus wentii 2, Penicillium expansum and Penicillium granulatum were chosen, concerning their antioxidant activity and total phenolic content. These fungal strains were applied on agro residues viz. sugarcane bagasse, corn cob, rice straw, pea pod and wheat straw, to evaluate the release of phenolic compounds. The fermented extracts from various agro-residues showed good antioxidant activity against DPPH, ferric ion, and nitric oxide radicals. The highest antioxidant activity was observed in fermented extracts of sugarcane bagasse, followed by pea pod. Additionally, the total phenolic content in the fermented extracts positively correlated with antioxidant potential. This study highlights the significant potential of solid substrate fermentation using soil-isolated fungi and agro-residues to produce bioactive phenolic compounds with potent antioxidant properties. The utilization of SSF for the extraction of bioactive compounds from natural sources not only offers a clean and sustainable approach but also contributes to the valorization of agro-industrial residues.