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This study aimed to produce and optimize a Cordyceps militaris-based oil-in-water (O/W) nanoemulsion (NE) encapsulated in sea buckthorn oil (SBT) using an ultrasonication process. Herein, a nonionic surfactant (Tween 80) and chitosan cosurfactant were used as emulsifying agents. The Cordyceps nanoemulsion (COR-NE) was characterized using Fourier-transform infrared spectroscopy (FT-IR), dynamic light scattering (DLS), and field-emission transmission electron microscope (FE-TEM). The DLS analyses revealed that the NE droplets were 87.0 ± 2.1 nm in diameter, with a PDI value of 0.089 ± 0.023, and zeta potential of −26.20 ± 2. The small size, low PDI, and stable zeta potential highlighted the excellent stability of the NE. The NE was tested for stability under different temperature (4 °C, 25 °C, and 60 °C) and storage conditions for 3 months where 4 °C did not affect the stability. Finally, in vitro cytotoxicity and anti-inflammatory activity were assessed. The results suggested that the NE was not toxic to RAW 264.7 or HaCaT (human keratinocyte) cell lines at up to 100 µL/mL. Anti-inflammatory activity in liposaccharides (LPS)-induced RAW 264.7 cells was evident at 50 µg/mL and showed inhibition of NO production and downregulation of pro-inflammatory gene expression. Further, the NE exhibited good antioxidant (2.96 ± 0.10 mg/mL) activity and inhibited E. coli and S. aureus bacterial growth. Overall, the COR-NE had greater efficacy than the free extract and added significant value for future biomedical and cosmetics applications. [ABSTRACT FROM AUTHOR]