A new sesquiterpene quinone, 21-dehydroxybolinaquinone (5), together with two known related analogues, bolinaquinone (6) and dysidine (7), had been isolated from the Hainan sponge Dysidea villosa. The structure of the new compound 5 was elucidated on the basis of detailed analysis of spectroscopic data and by comparison with related model compounds. Compounds 5-7 were evaluated for the inhibitory activity against hPTP1B, a potential drug target for treatment of type-II diabetes and obesity, and cytotoxic activity against Hela cell line. The results showed that dysidine (7) had the strongest hPTP1B inhibitory activity with an IC(50) value of 6.70microM and 6 had significant cytotoxic activity against Hela cell line with an IC(50) value of 5.45microM. New compound 5 showed moderate PTP1B inhibitory activity and cytotoxicity with IC(50) values of 39.50 and 19.45microM, respectively.