FIP-fve is an immunomodulatory protein isolated from Flammulina velutipes that possesses anti-inflammatory and immunomodulatory activities. However, little is known about its anticancer effects. It is suppressed cell proliferation of A549 lung cancer cells on MTT assay following 48 h treatment of FIP-fve. FIP-fve treatment also resulted in cell cycle arrest but not apoptosis on flow cytometry. This immunomodulatory protein was observed to increase p53 expression, as well as the expression of its downstream gene p21, on Western blot. FIP-fve inhibited migration of A549 cells on wound healing assay and decreased filopodia fiber formation on labeling with Texas Red-X phalloidin. To confirm the effect of FIP-fve on the role of Rac1 in filopodia formation, we investigated the activity of Rac1 in A549 cells following FIP-fve treatment. FIP-fve inhibited EGF-induced activation of Rac1. We demonstrated that FIP-fve decreases RACGAP1 mRNA and protein levels on RT-PCR and Western blot. In addition, the reporter activity of RACGAP1 was reduced by FIP-fve on RacGAP1 promoter assay. Silencing of RacGAP1 decreased cell migration, and overexpression of RacGAP1 increased cell migration in A549 cells. In conclusion, FIP-fve inhibits lung cancer cell migration via RacGAP1 and suppresses the proliferation of A549 via p53 activation pathway.