A novel water-soluble polysaccharide fraction, CME-1, with a molecular mass of 27.6 kDa and containing mannose and galactose in a respective ratio of 4:6, was prepared from Cordyceps sinensis mycelia and identified by NMR and GC-MS. In the current study, we examined whether CME-1 has anti-inflammatory effects in RAW264.7 cells. The ability of CME-1 to inhibit H(2)O(2)-induced cell death in RAW264.7 cells was assessed by using an MTT assay and annexin V/propidium iodide double staining; we found that CME-1 protected cells against H(2)O(2)-induced injury. H(2)O(2)-induced intracellular oxidative stress and mitochondrial membrane depolarization were also diminished with CME-1 treatment. We evaluated the hydroxyl radical scavenging ability of CME-1 by using the DMPO-electron spin resonance technique, which indicated that CME-1 acts as an intracellular antioxidant in a concentration-dependent manner through a mechanism other than its scavenging activity. Activities of both neutral and acid sphingomyelinases (SMases) were assessed in vitro, and results showed that the CME-1 inhibited activities of both neutral and acid SMases in a concentration-dependent manner. CME-1 reduced H(2)O(2) treatment-elevated C16- and C18-ceramide levels measured by LC/MS/MS in RAW264.7 cells. Results suggest that CME-1 protects RAW264.7 cells against oxidative stress through inhibition of SMase activity and reduction of C16- and C18-ceramide levels.