Cordyceps militaris (CM) and its active ingredient cordycepin have been reported to inhibit tumor growth, but the mechanisms are not fully understood. This study used a mouse model for oral cancer and a cell line, 4NAOC-1 derived from the model to study the mechanisms. Our results show that a CM preparation (CMP) can significantly inhibit tumor development and malignant transformation in the model. In vitro data indicate that CMP and cordycepin can inhibit 4NAOC-1 cell proliferation, either anchorage-dependent or -independent. Cordycepin can also increase cell apoptosis, and decrease cell mitosis and EGFR signaling. In accordance, CMP treatment can significantly decrease the levels of ki-67 and EGFR signaling molecules in cancer tissues. We also found that the levels of IL-17A in cancer tissues of control mice were significantly increased, and CMP inhibited these levels. IL-17A can stimulate cancer cell proliferation, which can be suppressed by cordycepin. Furthermore, cordycepin can reduce the expression of IL-17RA and its downstream signaling molecules. Moreover, CMP and cordycepin can significantly decrease IL-17A production in vitro and in vivo. Finally, CMP and its ingredients can enhance tumoricidal activities with increase in IFN-γ and TNFα, and decrease PD-L1 expression. In conclusion, CMP and its ingredient cordycepin can inhibit tumor growth and malignant transformation in a mouse model for oral cancer via inhibition of EGFR- and IL-17RA-signaling and enhancement of anti-tumor immunity.