Chemical investigation on a marine sponge, Dactylospongia elegans, yielded five new γ-oxygenated butenolide sesterterpene derivatives, dactylospenes A–E (1–5), as well as two known biosynthetically related compounds, luffariellolide (6) and furospinosulin B (7). The structures of these compounds were elucidated on the basis of their spectroscopic data, experimental and calculated electronic circular dichroism (ECD) analysis, as well as comparison of the NMR data with those of known analogs. These metabolites are the first γ-oxygenated butenolide sesterterpenes to be reported from this genus. These compounds were evaluated in antimicrobial, anti-inflammatory, and cytotoxic assays. Only compounds 1, 3, and 6 exhibited moderate cytotoxicity against DU145, SW1990, Huh7, and PANC-1 cancer cell lines with IC50 values in the range of 2.11–13.35 μM. Furthermore, compound 2, without cytotoxicity, exhibited significant inhibitory effects (inhibitory rate 77.5%) on nitric oxide production induced by lipopolysaccharide at 10 μM.