Phellinus pini, a medicinal mushroom, has been used as folk medicine in Asian countries for treating ailments such as cancer and gastrointestinal diseases. In this study we evaluated in vitro the antidementia and anti-inflammatory activities of Ph. Pini fruiting bodies. Eleven phenol compounds were detected by high-performance liquid chromatography analysis. Acetylcholinesterase and butyrylcholinesterase inhibitory effects of a methanol extract and a hot water extract were moderate and comparable with those of galanthamine, the standard drug used to treat the early stages of Alzheimer's disease. The methanol extract had a neuroprotective effect against glutamate-induced cytotoxicity on PC-12 cells at concentration ranging from 20 to 40 µg/mL. The mushroom extracts also inhibited the production of nitric oxide and the expression of inducible nitric oxide synthase in lipopolysaccharide-induced RAW 264.7 macrophages, and they significantly inhibited in vivo carrageenan-induced hind-paw edema in rats. Therefore, it is suggested that Ph. Pini fruiting bodies possess anticholinesterase and anti-inflammatory effects.