1. Activated microglial cells are believed to play an active role in most brain pathologies, during which they can contribute to host defence and repair but also to the establishment of tissue damage. These actions are largely mediated by microglial secretory products, among which are prostaglandins (PGs) and nitric oxide (NO). 2. The anti-inflammatory protein, lipocortin 1 (LC1) was reported to have neuroprotective action and to be induced by glucocorticoids in several brain structures, with a preferential expression in microglia. In this paper we tested whether the neuroprotective effect of LC1 could be explained by an inhibitory effect on microglial activation. 3. We have previously shown that bacterial endotoxin (LPS) strongly stimulates PGE2 and NO production in rat primary microglial cultures, by inducing the expression of the key enzymes cyclo-oxygenase-2 (COX-2) and inducible nitric oxide synthase (iNOS), respectively. 4. Dexamethasone (DEX, 1-100 nM) and LC1-derived N-terminus peptide (peptide Ac2-26, 1-100 microg ml(-1)) dose-dependently inhibited the production of both PGE2 and NO from LPS-stimulated microglia. The inhibitory effects of DEX on NO and of the peptide on NO and PGE2 synthesis were partially abrogated by a specific antiserum, raised against the N-terminus of human LC1. The peptide Ac2-26 did not affect arachidonic acid release from control and LPS-stimulated microglial cultures. 5. Western blot experiments showed that the LPS-induced expression of COX-2 and iNOS was effectively down-regulated by DEX (100 nM) and peptide Ac2-26 (100 microg ml(-1)). 6. In conclusion, our findings support the hypothesis that LC1 may foster neuroprotection by limiting microglial activation, through autocrine and paracrine mechanisms.