Phallus luteus (Phallaceae), previously known as Dictyophora indusiata, is an edible and medicinal mushroom. As part of a continuing project to discover structurally and/or biologically novel natural products from wild mushrooms, we aimed to perform a chemical investigation of the methanol extract of P. luteus combined with a liquid chromatography-mass spectrometry-guided analysis coupled to an in-house UV spectral library. Two new sesquiterpenes, phallac acids A (1) and B (2), were isolated and determined. The chemical structure of the new natural products was unambiguously determined using a combination of 1D and 2D NMR and high-resolution electrospray ionization mass spectrometry data. To our knowledge, this is the first study to report linear sesquiterpene carboxylic acids from P. luteus. The new compounds were evaluated for α-glucosidase inhibitory activities where phallac acid B (2) showed α-glucosidase inhibitory potential (IC50 value of 94.89 ± 5.57 μM) compared with the standard acarbose (IC50 value of 26.23 ± 1.31 μM).