Overactivated microglia is involved in various kinds of neurodegenerative diseases. Suppression of microglial overactivation has emerged as a novel strategy for treatment of neuroinflammation-based neurodegeneration. In the current study, anti-inflammatory effects of oxytocin (OT), which is a highly conserved nonapeptide with hormone and neurotransmitter properties, were investigated in vitro and in vivo. BV-2 cells and primary microglia were pre-treated with OT (0.1, 1, and 10 μM) for 2 h followed by LPS treatment (500 ng/ml); microglial activation and pro-inflammatory mediators were measured by Western blot, RT-PCR, and immunofluorescence. The MAPK and NF-κB pathway proteins were assessed by Western blot. The intracellular calcium concentration ([Ca2+]i) was determined using Fluo2-/AM assay. Intranasal application of OT was pre-treated in BALB/C mice (adult male) followed by injected intraperitoneally with LPS (5 mg/kg). The effect of OT on LPS-induced microglial activation and pro-inflammatory mediators was measured by Western blot, RT-PCR, and immunofluorescence in vivo. Using the BV-2 microglial cell line and primary microglia, we found that OT pre-treatment significantly inhibited LPS-induced microglial activation and reduced subsequent release of pro-inflammatory factors. In addition, OT inhibited phosphorylation of ERK and p38 but not JNK MAPK in LPS-induced microglia. OT remarkably reduced the elevation of [Ca2+]i in LPS-stimulated BV-2 cells. Furthermore, a systemic LPS-treated acute inflammation murine brain model was used to study the suppressive effects of OT against neuroinflammation in vivo. We found that pre-treatment with OT showed marked attenuation of microglial activation and pro-inflammatory factor levels. Taken together, the present study demonstrated that OT possesses anti-neuroinflammatory activity and might serve as a potential therapeutic agent for treating neuroinflammatory diseases.