Boswellia serrata, Linn F (Burseraceae) is commonly used in Indian system of medicine (Ayurvedic) as an anti-inflammatory, analgesic, anti-arthritic and anti-proliferative agent. This study was planned to investigate the water-soluble fraction of the oleoresin gum of Boswellia serrata (BS extract) on lipopolysaccharide (LPS) induced nitric oxide (NO) production by macrophages under in vivo and in vitro conditions. In the previous condition, rats were fed on atherogenic diet (2.5% cholesterol, 1% cholic acid, 15.7 % saturated fat) along with the BS extract for 90 days. Blood was collected for lipid profile and toxicological safety parameters. Peritoneal macrophages were isolated and cultured to see the LPS induced NO production. Under in vivo experiment, BS extract significantly reduced serum total cholesterol (38-48 %), increased serum high-density lipoprotein- cholesterol (HDL-cholesterol, 22-30%). Under in vitro experiments with thioglycolate activated macrophages, it inhibited LPS induced (NO) production with IC 50 value at 662 ng /ml. Further, this fraction, in the dose of 15 mg/100 g body wt for 90 days, did not show any increase in serum glutamate-pyruvate transaminase (SGPT) and blood urea, in normal control animals. However, it significantly reversed the raised SGPT and blood urea in the atherogenic diet-fed animals. Transverse section of liver and kidney also supported its protective effect. Thus it may be concluded that water extract of Boswellia serrata possesses strong hypocholesterolemic property along with increase in serum HDL. It inhibits the LPS induced NO production by the activated rat peritoneal macrophages and show hepato-protective and reno-protective property.