By-1 was obtained from spent broth from submerged cultures of Taiwanofungus camphoratus. This report evaluates the effects of By-1 on plate clone formation, wound healing, cell cycle, activated caspase-3 expression, and ROS release in A549 lung cancer cells. The result of plate clone formation assay revealed that By-1 could dramatically inhibit the viability of A549 cells in vitro. The inhibitory effect of By-1 on cell migration was tested using a wound healing assay. Proliferation rates of A549 cells were significantly inhibited following exposure to By-1 (12.5, 50, and 80 μg/mL). Flow cytometry revealed that the extracts increased, in a concentration-dependent manner, the number of cells in the G0/G1 phases of the cell cycle. The results of the caspase-3 experiment suggested that By-1 could induce A549 cells apoptosis, and this apoptosis was related to the release of reactive oxygen species by the A549 cells. All these results indicate that By-1 has potential in anti-lung cancer drug development.