Chemical investigation of the EtOH extract of the soft coral Cespitularia taeniata May collected in Taiwan has resulted in the isolation of two new sesquiterpene lactams, taenialactams A and B (1 and 2, resp.), and a new sesquiterpene lactone, taenialactone A (3), together with 8beta-methoxyatractylenolide (4) and atractylenolactam (5). The structures of these compounds were determined on the basis of spectroscopic analyses. The in vitro cytotoxic activities of the isolated metabolites were tested against KB, Daoy, and WiDr cell lines. A biogenetic pathway for these novel compounds was proposed.