This study investigated the changes in phytochemical composition and inflammatory response of crude papaya (Carica papaya L.) seed oil (CPO) and its refined forms (degummed, PDG; deacidified, PDA; decolorized, PDC; deodorized, PDO). Oils were analyzed for their phytochemical composition, oil quality parameters, antioxidant activity, and their inflammatory response in LPS-stimulated THP-1 macrophages. At higher refining degrees, particularly after deacidification, the contents of phytochemicals (sterols, tocopherols, and polyphenols) decreased while oxidation products increased. Both CPO (0.1–1.0 mg/mL) and PDG reduced the secretion and mRNA expression of LPS-stimulated inflammatory cytokines and mediators and also blocked the activation of the NF-κB pathway. PDA, PDC, and PDO showed low anti-inflammatory or even pro-inflammatory activity. Correlation analysis showed that 4 polyphenols and 2 phytosterols were responsible for the oil's anti-inflammatory effects. These findings indicated that moderate refining is suggested for papaya seed oil processing for retaining bioactive ingredients and anti-inflammatory ability.