Interleukin (IL)–38 belongs to the IL–1 family and is part of the IL–36 subfamily due to its binding to the IL–36 Receptor (IL–1R6). In the current study, we assessed the anti-inflammatory properties of IL–38 in murine models of arthritis and systemic inflammation. First, the anti-inflammatory properties of mouse and human IL–38 precursors were compared to forms with a truncated N–terminus. In mouse bone marrow derived dendritic cells (BMDC), human and mouse IL–38 precursors with a truncation of the two N-terminal amino acids (3–152) suppressed LPS-induced IL–6. Recombinant human IL–38 (3–152) was further investigated for its immunomodulatory potential using four murine models of inflammatory disease: streptococcal cell wall (SCW)-induced arthritis, monosodium urate (MSU) crystal-induced arthritis, MSU crystal-induced peritonitis, and systemic endotoxemia. In each of these models IL–38 significantly reduced inflammation. In SCW and MSU crystal-induced arthritis, joint swelling, inflammatory cell influx, and synovial levels of IL–1β, IL–6, and KC were reduced by 50% or greater. These suppressive properties of IL–38 in SCW-induced arthritis were independent of the anti-inflammatory co-receptor IL–1R8, as IL–38 reduced arthritis equally in IL–1R8 deficient and WT mice. In MSU crystal-induced peritonitis, IL–38 reduced hypothermia, while plasma IL–6 and KC and peritoneal KC levels were reduced by 65–70%. In the LPS endotoxemia model, IL–38 pretreatment reduced systemic IL–6, TNFα and KC. Furthermore, in ex vivo cultured bone marrow, LPS-induced IL–6, TNFα and KC were reduced by 75–90%. Overall, IL–38 exhibits broad anti-inflammatory properties in models of systemic and local inflammation and therefore may be an effective cytokine therapy.