The fungus Taiwanofungus camphoratus is commonly used for medicinal purposes in Taiwan. It is used as a detoxicant for food poisoning and considered to be a precious folk medicine for hepatoprotection and anti-inflammation. In this study, a lipopolysaccaride (LPS)-challenged ICR mouse acute inflammation model and a LPS-induced macrophage model were used to evaluate the anti-inflammatory activity of T. camphoratus. Ethanol extract of T. camphoratus significantly inhibited expression of iNOS and COX-2 in the liver of LPS-challenged acute inflammatory mice. The ethyl acetate fraction and its isolated compound, antrocamphin A, significantly suppressed nitrite/nitrate concentration in LPS-challenged RAW 264.7 cells. Antrocamphin A showed potent anti-inflammatory activity by suppressing pro-inflammatory molecule release via the down-regulation of iNOS and COX-2 expression through the NF-kappaB pathway. This study, therefore, first demonstrates the bioactive compound of T. camphoratus and illustrates the mechanism by which it confers its anti-inflammatory activity.