Cholinergic anti-inflammatory pathway has therapeutic effect on inflammation-associated diseases. However, the exact mechanism of nicotine-mediated anti-inflammatory effect is still unclear. TIPE2, a new member of tumor necrosis factor-α-induced protein-8 family, is a negative regulator of immune homeostasis. However, the roles of TIPE2 in cholinergic anti-inflammatory effect are still uncertain. Here, we demonstrated that nicotine exerts its anti-inflammatory effect by TIPE2 upregulation and phosphorylated stat3 mediated the inhibition of NF-κB activation, which was supported by the following evidence: firstly, both nicotine and TIPE2 inhibit pro-inflammatory cytokine release via NF-κB inactivation. Secondly, nicotine upregulates TIPE2 expression via α7 nicotinic acetylcholine receptor. Moreover, the enhancement of stat3 phosphorylation and decrease of LPS-induced p65 translocation were achieved by nicotine treatment. Importantly, nicotine treatment augments the interaction of phosphorylated stat3 and p65, indicating that the inhibitory effect of nicotine on NF-κB activation was mediated with protein-protein interactions. Hence, this study revealed that TIPE2 upregulation and stat3 phosphorylation contribute to nicotine-mediated anti-inflammation effect, indicating that TIPE2 and stat3 might be potential molecules for dealing with inflammation-associated diseases.