The farnesoid X receptor (FXR) is a nuclear receptor that plays key roles in hepatoprotection by maintaining the homeostasis of liver metabolism. FXR null mice display strong hepatic inflammation and develop spontaneous liver tumors. In this report, we demonstrate that FXR is a negative modulator of nuclear factor kappaB (NF-kappaB)-mediated hepatic inflammation. Activation of FXR by its agonist ligands inhibited the expression of inflammatory mediators in response to NF-kappaB activation in both HepG2 cells and primary hepatocytes cultured in vitro. In vivo, compared with wild-type controls, FXR(-/-) mice displayed elevated messenger RNA (mRNA) levels of inducible nitric oxide synthase (iNOS), cyclooxygenase-2 (COX-2), interferon-inducible protein 10, and interferon-gamma in response to lipopolysaccharide (LPS). Examination of FXR(-/-) livers showed massive necroses and inflammation after treatment with LPS at a dose that does not induce significant liver damage or inflammation in wild-type mice. Moreover, transfection of a constitutively active FXR expression construct repressed the iNOS, COX-2, interferon-inducible protein 10 and interferon-gamma mRNA levels induced by LPS administration. FXR activation had no negative effects on NF-kappaB-activated antiapoptotic genes, suggesting that FXR selectively inhibits the NF-kappaB-mediated hepatic inflammatory response but maintains or even enhances the cell survival response. On the other hand, NF-kappaB activation suppressed FXR-mediated gene expression both in vitro and in vivo, indicating a negative crosstalk between the FXR and NF-kappaB signaling pathways. Our findings reveal that FXR is a negative mediator of hepatic inflammation, which may contribute to the critical roles of FXR in hepatoprotection and suppression of hepatocarcinogenesis.