In order to search for bioactive compounds, we have studied the chemical constituents from the organic extracts of two Formosan soft corals Sarcophyton crassocaule and Paralemnalia thyrsoides. This study had led to the isolation of forty-six natural compounds 1¡V46, including sixteen new cembrane¡Vtype diterpenoids, crassocolides A¡VP (1¡V16) and four known cembrane¡Vtype compounds 17¡V20 from S. crassocaule; nineteen new sesquiterpenoids and norsesquiterpenoids, paralemnone (21), isoparalemnone (22), paralemnol (23) and paralemnolins A¡VP (24¡V39), along with seven known compounds 40¡V46 from P. thyrsoides. The structures of these compounds were established by the detailed spectroscopic analysis (IR, MS, 1D¡B2D NMR) and by comparison with related physical and spectral data from other known compounds. The absolute configurations of 1-46 were determined using a modified Mosher's method for 1, 7, 22 and 27. The structures of 5, 21, 24 and 37 were further proven by X-ray diffraction analysis. The cytotoxicity of compounds 1-46 against a limited panel of cancer cell lines was also determined. Also, the activity of compounds 21-28, 35-37 and 41-42 to inhibit the pro-inflammatory iNOS and COX-2 protein expression of LPS-stimulated RAW264.7 macrophage cells has been estimated.