Ganoderma lucidum, an oriental polypore fungus and medicinal mushroom, has a long history of use for promoting health and longevity in Korea, China, and other Asian countries. This study was aimed at determining the anti-inflammatory activity and mechanism of action of Ganoderma lucidum in murine macrophage RAW 264.7 cells. Ganoderma lucidum was extracted with ethanol and freeze-dried. The anti-inflammatory effect (nitrite production) of Ganoderma lucidum extracts was tested using a nitric oxide (NO) colorimetric assay. Semi-quantitative reverse transcription polymerase chain reaction (RT-PCR) was performed to quantify the mRNA expression of cytokines including tumor necrosis factor-α (TNF-α), interleukin (IL)-1β, and IL-6. Western blotting was performed to measure the expression levels of inflammation-related proteins, such as inducible nitric oxide synthase (iNOS), cyclooxygenase-2 (COX-2), nuclear factor kappa B (NF-κB) p65, and phosphorylated NF-κB p65. The NO colorimetric assay showed that NO production increased with the treatment of lipopolysaccharide in (LPS)-activated RAW 264.7 macrophages and decreased with the co-treatment of Ganoderma lucidum extracts and LPS. Ganoderma lucidum extracts repressed the mRNA expressions of cytokines, which were increased after the LPS treatment. In addition, Ganoderma lucidum extracts inhibited the LPS-induced expression of iNOS and COX-2 and the LPS-induced phosphorylation of NF-κB p65. These results suggest that the Ganoderma lucidum extracts exert an anti-inflammatory activity by inhibiting NF-κB related proteins and cytokines.