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Two eudesmane sesquiterpenoids, verticillatol (1) and 5α-acetoxy-4(14)-eudesmene-1β-ol (2) and two cembrane diterpenoids, (–)-leptodiol acetate (3) and sinulacembranolide A (4) were isolated from the octocoral Sinularia gaweli and compounds 2–4 are new isolates. The structures of new terpenoids 2–4 were elucidated by spectroscopic methods and by comparison the spectral data with those of known analogues. Terpenoid 4 was found to inhibit the accumulation of the pro-inflammatory inducible nitric oxide synthase (iNOS) protein of the lipopolysaccharide (LPS)-stimulated RAW264.7 marcophage cells.