Two new diterpenoids, designated cespitulactones A (1) and B (2), were isolated from a sample of the soft coral Cespitularia taeniata collected in Taiwan. Compound 1 possesses a novel structure with a bond cleavage between C-10 and C-11, and having a 14-membered lactone ring junction between C-10 and C-12. Their structures were elucidated on the basis of extensive spectroscopic analysis and chemical derivatization. The isolated compounds were also evaluated for cytotoxicity toward human cancer cell lines.