Inflammation has recently been implicated as a critical mechanism responsible for neurodegenerative diseases. In this study, paeonol (1-(2-hydroxy-4-methoxyphenyl)ethanone) isolated from the sea horse Hippocampus kuda Bleeler was studied as an agent to suppress LPS induced activation of BV-2 microglial and RAW264.7 macrophage cells. The results obtained showed that paeonol significantly suppressed LPS induced release of pro-inflammatory products such as nitric oxide (NO), prostaglandin E2 (PGE2), and cytokines; tumor necrosis factor-α (TNF-α), interleukin-1β (IL-1β) and interleukin-6 (IL-6). Furthermore, the compound down regulated the protein and gene expression levels of inducible nitric oxide synthase (iNOS), cyclooxygenase-2 (COX-2), TNF-α, IL-1β and IL-6 in both cell lines. Molecular signaling pathway studies showed that paeonol inhibited the translocation of nuclear factor-κB (NF-κB) p65 and p50 subunits to the nucleus by blocking IKKα/β (IκB kinase α/β) mediated degradation of IκBα. Moreover, it suppressed the phosphorylation of mitogen activated protein kinase (MAPK) pathway molecules; c-Jun N-terminal kinases (JNK) and p38 in both cell lines. Collectively these results indicate that paeonol blocked the LPS stimulated inflammatory responses in BV-2 and RAW264.7 cells via modulating MAPK and NF-κB signaling pathways. Therefore, paeonol could be a promising candidate to be used in neuro-inflammatory therapy.