Exaggerated inflammatory responses in microglia represent one of the major risk factors for various central nervous system's (CNS) associated pathologies. Release of excessive inflammatory mediators such as prostaglandins and cytokines are the hallmark of hyper-activated microglia. Here we have investigated the hitherto unknown effects of capsaicin (cap) - a transient receptor potential vanilloid 1 (TRPV1) agonist- in murine primary microglia, organotypic hippocampal slice cultures (OHSCs) and human primary monocytes. Results demonstrate that cap (0.1-25 µM) significantly (p < 0.05) inhibited the release of prostaglandin E2 (PGE2), 8-iso-PGF2α, and differentially regulated the levels of cytokines (TNF-α, IL-6 & IL-1β). Pharmacological blockade (via capsazepine & SB366791) and genetic deficiency of TRPV1 (TRPV1-/-) did not prevent cap-mediated suppression of PGE2 in activated microglia and OHSCs. Inhibition of PGE2 was partially dependent on the reduced levels of PGE2 synthesising enzymes, COX-2 and mPGES-1. To evaluate potential molecular targets, we discovered that cap significantly suppressed the activation of p38 MAPK and MAPKAPK2 (MK2). Altogether, we demonstrate that cap alleviates excessive inflammatory events by targeting the PGE2 pathway in in vitro and ex vivo immune cell models. These findings have broad relevance in understanding and paving new avenues for ongoing TRPV1 based drug therapies in neuroinflammatory-associated diseases.