Termitomyces albuminosus has been recognized to have the best mushrooms in China, in terms of taste and aroma. The efficacy of these mushrooms has been recorded in the botanical list. However, research on the development of their artificial culture methods is necessary. In this study, we prepared an organic solvent extract and a hot water extract to understand the development of compounds and functional foods with antioxidant and anti-inflammatory activities. The IC50 value of DPPH radical scavenging activity of the hot water extract (TA4) was 1.5 mg/mL and the IC50 value of the MeOH fraction (TA2) was 1.93 mg/mL. The anti-inflammatory activity was investigated by the inhibition of NO production. EtOAc fraction (TA1) is a crude extract, but 79% of NO production was inhibited at 100 μg/mL. NO was not produced at 200 μg/mL. TA1-5-6, from TA1 inhibited NO production by 15% as compared to the positive control at 15 μg/mL, and completely inhibited NO production at 30 μg/mL. No cytotoxicity was observed at 50 μg/mL. TA2-1-5 from the MeOH fraction (TA2) inhibited more than 75% of NO production at 30 μg/mL; cytotoxicity was very low even at 50 μg/mL. In conclusion, by selective solvent selection, it was possible to manufacture an extract with no cytotoxicity and excellent biological activities. Furthermore, the extracts showed potential for developing various functional foods and drugs.