We are concerned with the asymptotic dynamics of a certain type of semilinear parabolic equation, namely,ut=uxx+(f(u))x+g(u)+h(x) on the interval [0,L]. Under the general condition we prove that this equation admits a dissipative dynamical system and it possesses the global attractor. But for largeL > 0, we do not know whether or not an inertial manifold exists. Here we introduce a nonlinear change of variables so that we transform the above equation to a reaction diffusion system which possesses exactly the same asymptotic dynamics. We then prove the existence of an inertial manifold for the transformed equation; thereby we find the ordinary differential equation which describes completely the long-time dynamics of the orginal equation.