Cordyceps militaris mycelium extracts containing high amounts of cordycepin were evaluated in vitro for their antiinflammatory and tumor cell growth-inhibitory activities. All extracts dose dependently inhibited the increased production of inflammatory mediators including reactive oxygen species (ROS), nitric oxide (NO), and β-hexosaminidase in lipopolysaccharide (LPS)-stimulated inflammatory cells. All extracts were evaluated for anti-proliferative activity against normal RBL-2H3 cells and diverse types of cancer cell lines, including HCT, MC5-7, U-87MG, AGS, and A549 cells. The extract showed the strongest growth inhibition (IC50 = 28.13 μg/mL) relative to vehicle-treated control cells against fibrosarcoma (MC5-7). We have demonstrated anti-inflammatory activity of C. militaris via inhibition of NO, ROS production, and β-hexosaminidase release in activated cells. C. militaris mycelium extract was also evaluated mechanistically and found to exert six types of anti-cancer activity, confirming its pharmacological potential. Our study suggests C. militaris use as a potential source of anti-inflammatory and anticancer agents. C. militaris may also be considered a functional food.