In this study, chemical compositions of hydrodistilled essential oil and anti-inflammatory activities from the twigs of Cinnamomum osmophloeum Kaneh. were investigated for the first time. The chemical constituents of the twig essential oil were further analyzed by GC-MS and they were found to be L-bornyl acetate (15.89%), caryophyllene oxide (12.98%), gamma-eudesmol (8.03%), beta-caryophyllene (6.60%), T-cadinol (5.49%), delta-cadinene (4.79%), trans-beta-elemenone (4.25%), cadalene (4.19%), and trans-cinnamaldehyde (4.07%). The effects of essential oil on nitric oxide (NO) and prostaglandin E2 (PGE2) production in lipopolysaccharide (LPS)-activated RAW 264.7 macrophages were also examined. Results of nitric oxide tests indicated that twig essential oil and its major constituents such as trans-cinnamaldehyde, caryophyllene oxide, L-borneol, L-bornyl acetate, eugenol, beta-caryophyllene, E-nerolidol, and cinnamyl acetate have excellent activities. These findings demonstrated that essential oil of C. osmophloeum twigs have excellent anti-inflammatory activities and thus have great potential to be used as a source for natural health products.