Costunolide, a sesquiterpene lactone present in Costus speciosus root exerts a variety of pharmacological activity but its effects on neuroinflammation have not been studied. Microglia, the resident phagocytic cells in the central nervous system respond to neuroinflammation and their overwhelming response in turn aggravate brain damage during infection, ischemia and neurodegenerative diseases. In this study, we report the effect of Costunolide on the production of proinflammatory mediators and mechanisms involved in BV2 microglial cells stimulated with LPS. Costunolide attenuated the expression of tumour necrosis factor-alpha, interleukin-1,6, inducible nitric oxide synthase, monocyte chemotactic protein 1 and cyclooxygenase 2 in activated microglia. This Costunolide-mediated inhibition was correspondent with the inhibition of NFkappaB activation. It has been further shown that Costunolide suppressed MAPK pathway activation by inducing MKP-1 production. Collectively our results suggest that Costunolide shows an ability to inhibit expression of multiple neuroinflammatory mediators and this is attributable to the compounds inhibition of NFkappaB and MAPK activation. This novel role of Costunolide upon investigation may aid in developing better therapeutic strategies for treatment of neuroinflammatory diseases.