Two new capnosane-based diterpenoids, flaccidenol A (1) and 7-epi-pavidolide D (2), two new cembranoids, flaccidodioxide (3) and flaccidodiol (4), and three known compounds 5 to 7 were characterized from the marine soft coral Klyxum flaccidum, collected off the coast of the island of Pratas. The structures of the new compounds were determined by extensive spectroscopic analyses, including 1D and 2D nuclear magnetic resonance (NMR) spectroscopy, and spectroscopic data comparison with related structures. The rare capnosane diterpenoids were isolated herein from the genus Klyxum for the first time. The cytotoxicity of compounds 1 to 7 against the proliferation of a limited panel of cancer cell lines was assayed. The isolated diterpenoids also exhibited anti-inflammatory activity through suppression of superoxide anion generation and elastase release in the N-formyl-methionyl-leucyl-phenylalanine/cytochalasin B (fMLF/CB)-stimulated human neutrophils. Furthermore, 1 and 7 also exhibited cytotoxicity toward the tested cancer cells, and 7 could effectively inhibit elastase release. It is worth noting that the biological activities of 7 are reported for the first time in this paper.