The marine fungus, Aspergillus flavipes (MTCC 5220), was isolated from the pneumatophore of a mangrove plant Acanthus ilicifolius found in Goa, India. The crude extract of A. flavipes was found to show anti‐inflammatory activity. It blocked interleukin‐6 (IL‐6) and tumor necrosis factor‐α (TNF‐α) production in lipopolysaccharide (LPS)‐activated THP‐1 cells with IC50 of 2.69±0.5 μM and 6.64±0.4 μM, respectively. The chemical investigation led to the isolation of optically inactive 4β‐[(1E)‐propen‐1‐yl]cyclopentane‐1β,2β‐diol (1) along with a new optically active diastereoisomeric compound, 4β‐[(1E)‐propen‐1‐yl]cyclopentane‐1β,2α‐diol (2). In addition, the fungus also produced known compounds (+)‐terrein (3), butyrolactone I (4) and butyrolactone II (5) in high yields. Among these, (+)‐terrein (3) exhibited IL‐6 and TNF‐α inhibition activity with IC50 of 8.5±0.68 μM and 15.76±0.18 μM, respectively, while butyrolactone I (4) exhibited IC50 of 12.03±0.85 μM (IL‐6) and 43.29±0.76 μM (TNF‐α) inhibition activity with low toxicity to host cells in LPS stimulated THP‐1 cells. This is the first report of the isolation and characterization of 4β‐[(1E)‐propen‐1‐yl]cyclopentane‐1β,2α‐diol (2). The structures of all the isolated compounds were elucidated on the basis of extensive detailed NMR spectroscopic data. Anti‐inflammatory activity of the fungi A. flavipes is presented here for the first time, which was due to (+)‐terrein and butyrolactone I, as the major constituents and they can be further explored in the therapeutic area.