A sesquiterpene lactone, costunolide (CTN), was identified from Magnolia grandiflora together with parthenolide (PTN) by its strong inhibition of LPS-induced NF-kappa B activation. CTN, which showed more potent inhibition than PTN in the NF-kappa B activation, strongly suppressed nitric oxide (NO) production in LPS-stimulated RAW 264.7 cells. RT-PCR and Western blot analyses demonstrated that CTN suppressed the expression of iNOS mRNA and protein in a dose-dependent manner. CTN also significantly inhibited LPS-induced DNA-binding activity of NF-kappa B as well as the LPS-induced degradation of I kappa B-alpha and -beta. Furthermore, CTN inhibited LPS-induced phosphorylation of I kappa B-alpha. These findings support that CTN inhibits NO production by down-regulating iNOS expression, at least, in part through the inhibition of I kappa Bs' phosphorylation and degradation, which are essential for the activation of NF-kappa B.