Marine sponges are found to be a rich source of bioactive compounds which show a wide range of biological activities including antiviral, antibacterial, and anti-inflammatory activities. This study aimed to investigate the possible anti-inflammatory, antioxidant and immunomodulator effects of the methanolic extract of the Red Sea marine sponge Xestospongia testudinaria. The chemical composition of the Xestospongia testudinaria methanolic extract was determined using Gas chromatography-mass spectroscopy (GC-MS) analysis. DPPH (2, 2-diphenyl-1-picryl-hydrazyl) was measured to assess the antioxidant activity of the sponge extract. Carrageenan-induced rat hind paw edema was adopted in this study. Six groups of rats were used: group1: Control, group 2: Carrageenan, group 3: indomethacin (10 mg/kg), group 4-6: Xestospongia testudinaria methanolic extract (25, 50, and 100 mg/kg). Evaluation of the anti-inflammatory activity was performed by both calculating the percentage increase in paw weight and hisopathologically. Assessment of the antioxidant and immunomodulatory activity was performed. GC-MS analysis revealed that there were 41 different compounds present in the methanolic extract. Sponge extract exhibited antioxidant activity against DPPH free radicals. Xestospongia testudinaria methanolic extract (100 mg/kg) significantly decreased % increase in paw weight measured at 1, 2, 3 and 4 h after carrageenan injection. Histopathologically, the extract caused a marked decrease in the capillary congestion and inflammatory cells infiltrate. The extract decreased paw malondialdehyde (MDA) and nitric oxide (NO) and increased the reduced glutathione (GSH), glutathione peroxidase (GPx), and catalase (CAT) activity. It also decreased the inflammatory cytokines, tumor necrosis factor-α (TNF-α), interleukin-1 β(IL-1β) and IL-6. The results of this study demonstrated the anti-inflammatory, antioxidant, and immunomodulatory effects of the methanolic extract of the Red Sea sponge Xestospongia testudinaria (100 mg/kg).