In the course of our screening program for new bioactive compounds, a naturally new 18-membered macrolide antibiotic, N-acetylborrelidin B (1) along with borrelidin (2) were obtained from the marine Streptomyces mutabilis sp. MII. The strain was isolated from a sediment sample collected in the Red Sea at the Hurghada Coast and characterized taxonomically. Additional nine diverse bioactive compounds were reported: 6-prenyl-indole-3-acetonitrile (3), sitosteryl-3β-d-glucoside, campesterol, ferulic acid, linoleic acid methyl ester, linoleic acid, N-acetylanthranilic acid, indole 3-acetic acid methyl ester, indole 3-carboxylic acid, and adenosine. Structure 1 was confirmed by in-depth NMR studies and by mass spectra, and comparison with related literature data. The antimicrobial activity of the strain extract and compounds 1 and 2 were studied using a panel of pathogenic microorganisms. The in vitro cytotoxicity of compounds 1 and 2 as well as the crude extract were tested against the human cervix carcinoma cell line (KB-3-1).