Jin-Chan-Hua, a traditional Chinese medicine with numerous pharmaceutical properties, is a biological complex of fungus and cicada larvae. In this study, the fungus Paecilomyces cicadae strain SH1 was obtained and cultivated to produce fruiting bodies in solid-state fermentation by using various cereals as base nutrients. The results indicated that 15 media (e.g., wheat, buckwheat, oatmeal, adzuki bean, black soybean, soybean, mung bean, speckled kidney bean, rice, millet, black glutinous rice, unpolished rice, peanut, pearl barley, and Job's tears) were favorable for high biomass or fruiting body production; thus, we conducted an anti-inflammatory assay in RAW 264.7 cells by using the fermented extracts of these substrates. Among the cereal substrates fermented with P. cicadae SH1, the alcohol extract of fermented oatmeal had the best anti-inflammatory ability with a dose-dependent effect, and it did not reduce the viability of RAW 264.7 cells at a concentration of 200 μg/mL. The results demonstrated that oatmeal solid-state fermented by P. cicadae SH1 has potential applications in the prevention or treatment of inflammation. To our knowledge, this study is the first to report on the development of functional foods and nutraceuticals through the solid-state fermentation of oatmeal by P. cicadae.