A novel fungal immunomodulatory protein (FIP) was found in the precious medical and edible mushroom Morchella conica SH, defined as FIP-mco, which belongs to the FIP family. Phylogenetic analyses of FIPs from different origins were performed using Neighbor-Joining method. It was found that FIP-mco belonged to a new branch of the FIP family and may evolved from a different ancestor compared with most other FIPs. The cDNA sequence of FIP-mco was cloned and expressed in the yeast Pichia Pastoris X33. The recombinant protein of FIP-mco (rFIP-mco) was purified by agarose Ni chromatography and determined by sodium dodecyl sulfate-polyacrylamide gel electrophoresis (SDS-PAGE) and Western blot analysis. The protein rFIP-mco could significantly suppress the proliferation of A549 and HepG2 cells at the concentration of 15 and 5 mg/ml, respectively, and inhibited the migration and invasion of human A549 and HepG2 cells at the concentration of 15 and 30 mg/ml respectively in vitro. Further, rFIPmco can significantly reduce the expression levels of TNF-a, IL-1b, and IL-6 in the THP1 cells (human myeloid leukemia mononuclear cells). In order to explore the potential mechanism of the cytotoxicity effect of rFIP-mco on A549 and HepG2 cells, cell cycle and apoptosis assay in the two cancer cells were conducted. The results demonstrated that G0/G1 to S-phase arrest and increased apoptosis may contribute to the proliferation inhibition by rFIP-mco in the two cancer cells. Molecular mechanism of rFIP-mco's reduction effect on the inflammatory cytokines was also studied by suppression of the NF-kB signaling pathway. It showed that suppression of NF-kB signaling is responsible for the reduction of inflammatory cytokines by rFIP-mco. The results indicated the prospect of FIP-mco from M. conica SH as an effective and feasible source for cancer therapeutic studies and medical applications.