Mushroom Inonotus obliquus (I. obliquus) has been used as functional food and traditional Chinese herbs for long time. An efficient method for bioassay-guided preparative isolation was used for identifying the anti-inflammatory and anticancer constituents in I. obliquus. The petroleum ether and ethyl acetate fractions were found to have significant inhibition effects on NO production and NF-κB luciferase activity in macrophage RAW 264.7 cells and cytotoxicity against human prostatic carcinoma cell PC3 and breast carcinoma cell MDA-MB-231. Six main constituents were isolated from these two fractions and they were identified as lanosterol (1), 3β-hydroxy-8,24-dien-21-al (2), ergosterol (3), inotodiol (4), ergosterol peroxide (5) and trametenolic acid (6). Compound ergosterol, ergosterol peroxide and trametenolic acid showed anti-inflammatory activities and ergosterol peroxide and trametenolic acid showed obviously cytotoxicity on human prostatic carcinoma cell PC3 and breast carcinoma MDA-MB-231 cell. The results obtained in this work might contribute to understanding the biological activity of mushroom I. obliquus for food and drug application.