Stains are known to be anti-inflammatory, but the mechanism remains poorly understood. Here we show that macrophages, either treated with statin in vitro or from statin-treated mice, have reduced cholesterol levels and higher expression of Jmjd3, a H3K27me3 demethylase. We provide evidence that lowering cholesterol levels in macrophages suppresses the ATP synthase in the inner mitochondrial membrane (IMM) and changes the proton gradient in the mitochondria. This activates NFkB and Jmjd3 expression to remove the repressive marker H3K27me3. Accordingly, the epigenome is altered by the cholesterol reduction. When subsequently challenged by the inflammatory stimulus LPS (M1), both macrophages treated with statins in vitro or isolated from statin-treated mice in vivo, express lower levels pro-inflammatory cytokines than controls, while augmenting anti-inflammatory Il10 expression. On the other hand, when macrophages are alternatively activated by IL4 (M2), statins promote the expression of Arg1, Ym1, and Mrc1. The enhanced expression is correlated with the statin-induced removal of H3K27me3 from these genes prior to activation. In addition, Jmjd3 and its demethylase activity are necessary for cholesterol to modulate both M1 and M2 activation. We conclude that upregulation of Jmjd3 is a key event for the anti-inflammatory function of statins on macrophages.