Abstract Ethnopharmacological relevance Pleurotus eryngii (DC. ex Fr.) Quel has been collected from the wild, cultivated and used in traditional medicines to treat various disorders and diseases since antiquity. In traditional Chinese medicine, the powdered fruiting bodies of Pleurotus eryngii were used for immunostimulation, skin-care, wound-healing, cancer and lumbago treatment. In the current study, we investigated the antiproliferative activity of Pleurotus eryngii powder on A549, BGC-823, HepG2 and HGC-27 cancer cells and its immunomodulating activity on macrophage, RAW 264.7 cells based on its active compound. Materials and methods A novel bioactive protein (PEP) was extracted from Pleurotus eryngii fruiting bodies powder and purified on DEAE-52, CM-52 and Superdex 75 column chromatographies using an ÄKTA purifier. Its cytotoxicity on A549, BGC-823, HepG2, HGC-27 and RAW 267.4 cell lines was then evaluated using MTT, alamar blue (AB), trypan blue (TB), neutral red (NR), lactate dehydrogenase (LDH), Annexin V FITC/PI and morphological change assays. Moreover, lysosomal enzyme activity, pinocytosis, nitric oxide (NO) and hydrogen peroxide (H2O2) production assays were used to examine immunomostimulatory activity of PEP on RAW 267.4 cells. Results Based on high performance gel permeation chromatography (HPGPC), Fourier transform infrared (FT-IR) and nuclear magnetic resonance (NMR) analyses, the isolated protein (PEP) had a molecular weight of 63 kDa, a secondary (α-helical) structure and was mainly composed of arginine, serine and glycine. PEP significantly (P<0.05) inhibited A549, BGC-823, HepG2 and HGC-27 tumor cells proliferation dose-dependently with an IC50 range of 36.5±0.84 to 229.0±1.24 µg/ml. Contrarily, PEP stimulated the proliferation of macrophages. Conclusion Pleurotus eryngii fruiting bodies powder has a potential application as a natural antitumor agent with immunomodulatory activity, proposedly, by targeting the lysosomes of cancerous cells and stimulating macrophage-mediated immune responses.