The culture supernatant of Paenibacillus sp. TKU036, a bacterium isolated from Taiwanese soils, showed high antioxidant activity (85%) when cultured in a squid pen powder (SPP)-containing medium at 37 °C for three days. Homogentisic acid (2,5-dihydroxyphenylacetic acid, HGA) was isolated and found to be the major antioxidant in the culture supernatant of the SPP-containing medium fermented by Paenibacillus sp. TKU036. Tryptophan was also present in the culture supernatant. The results of high-performance liquid chromatography (HPLC) fingerprinting showed that HGA and tryptophan were produced via fermentation but did not pre-exist in the unfermented SPP-containing medium. Neither HGA nor tryptophan was found in the culture supernatants obtained from the fermentation of nutrient broth or other chitinous material, i.e., medium containing shrimp head powder, by Paenibacillus sp. TKU036. The production of HGA via microorganisms has rarely been reported. In this study, we found that squid pen was a potential carbon and nitrogen source for Paenibacillus sp. Tryptophan (105 mg/L) and HGA (60 mg/L) were recovered from the culture supernatant. The isolated HGA was found to have higher antioxidant activity (IC50 = 6.9 μg/mL) than α-tocopherol (IC50 = 17.6 μg/mL). The anti-inflammatory activity of the isolated HGA (IC50 = 10.14 μg/mL) was lower than that of quercetin (IC50 = 1.14 μg/mL). As a result, squid pen, a fishery processing byproduct, is a valuable material for the production of tryptophan and the antioxidant and anti-inflammatory HGA via microbial conversion.