Illicium lanceolatum is a traditional Chinese medicine (TCM) for treating inflammatory diseases. Anti-inflammatory activities of I. lanceolatum stems and leaves were tested using ear edema models induced by dimethyl benzene in mice. Bioassay-guided fractionation of the ethanol extract of I. lanceolatum leaves and stems revealed that the ethyl acetate fraction exhibited inhibitory potency to dimethyl benzene-induced edema in the mouse ear. Phytochemical investigation on the active fraction led to the isolation of a new phenylpropanoid (1), together with fifteen known compounds. This is the first report of the isolation of 2-16 from I. lanceolatum. Of these compounds, compounds 1, 2 and 3 showed inhibitory activity on LPS-stimulated NO production in RAW 264.7 macrophages with IC50 values of 27.58, 26.59 and 34.35 μg/mL, respectively. I. lanceolatum stems and leaves can be exploited to alleviate inflammatory diseases, which makes the rare medicinal plant resources sustainable.