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The objective of this study was to investigate the potential effect of the polysaccharides isolated from <i>Hericium novae-zealandiae</i>, a native New Zealand fungus, on the <i>in vitro</i> proliferation of prostate cancer cell lines, gene expression, acetylcholinesterase (AChE) activity, and oxidation. One water-soluble and two alkali-soluble polysaccharide fractions were isolated from <i>H. novae-zealandiae</i>. The proliferation of the prostate cancer cell lines DU145, LNCaP, and PC3 was evaluated following treatment with these polysaccharide fractions. It was found that the polysaccharides possess anti-proliferative activity on LNCaP and PC3 cells, with a 50% growth inhibition (IC₅₀) value as low as 0.61 mg/mL in LNCaP. Subsequently, it was determined through via RT-qPCR assay that apoptosis was one of the possible mechanisms responsible for the anti-proliferative activity in LNCaP. This was supported by the up-regulation of <i>CASP3</i>, <i>CASP8</i>, and <i>CASP9</i>. An alternative, discovered in PC3, was revealed to be anti-inflammation, which was hinted at by the down-regulation of <i>IL6</i> and up-regulation of <i>IL24</i>. The polysaccharides also exhibited antioxidant and weak AChE inhibitory activities. This is the first report on the potential health benefits of polysaccharides prepared from the New Zealand fungus, <i>H. novae-zealandiae</i>.