In this study we found that licochalcone E (LicE), a recently isolated retrochalcone from Glycyrrhiza inflata, exhibits potent anti-inflammatory effects in 12-O-tetradecanoylphorbol-13-acetate (TPA)-induced mouse ear edema and lipopolysaccharide (LPS)-stimulated RAW 264.7 murine macrophage models. Topical application of LicE (0.5–2 mg) effectively inhibited TPA-induced (1) ear edema formation; (2) phosphorylation of stress-activated protein kinase/c-Jun-N-terminal kinase (SAPK/JNK), c-Jun, and extracellular signal regulated kinase 1/2; and (3) expression of inducible nitric oxide synthase (iNOS) and cyclooxygenase (COX)-2 proteins in mouse skin. The treatment of RAW 264.7 cells with LicE (2.5–7.5 μmol/L) induced a profound reduction in LPS-induced (1) release of NO and prostaglandin E2; (2) mRNA expression and secretion of interleukin (IL)-6, IL-1β and tumor necrosis factor-α; (3) promoter activity of iNOS and COX-2 and expression of their corresponding mRNAs and proteins; (4) activation of AKT, p38 mitogen activated protein kinase (MAPK), SAPK/JNK and c-Jun; (5) phosphorylation of inhibitor of κB (IκB) kinase-αβ and IκBα, degradation of IκBα, translocation of p65 (RelA) to the nucleus and transcriptional activity of nuclear factor (NF)-κB; and (6) transcriptional activity of activator protein (AP)-1. These results indicate that the LicE inhibition of NF-κB and AP-1 transcriptional activity through the inhibition of AKT and MAPK activation contributes to decreases in the expression of pro-inflammatory cytokines and the inducible enzymes iNOS and COX-2.