Plant-derived compounds with potent anti-inflammatory activity have attracted a great deal of attention as a source for novel anti-arthritic agents with minimal side effects. We attempted to determine the anti-arthritic effects of orally administered honokiol isolated from Magnolia species. The oral administration of honokiol inhibited the progression and severity of type II collagen (CII)-induced arthritis (CIA) by reducing clinical arthritis scores and paw swelling. The histological analysis demonstrated preserved joint space; and the immunohistochemical data showed that the levels of interleukin (IL)-17, matrix metalloproteinase (MMP)-3, MMP-9, MMP-13, and receptor activator for nuclear factor-κB ligand, as well as nitrotyrosine formation, were substantially suppressed in the honokiol-treated CIA mice. The elevated serum levels of tumor necrosis factor-α and IL-1β in the CIA mice were also restored to control levels via honokiol treatment. In the CIA mice, honokiol inhibited CII- or lipopolysaccharide-stimulated cytokine secretion in spleen cells, as well as CII-stimulated spleen cell proliferation. Furthermore, honokiol treatment reduced CIA-induced oxidative damage in the liver and kidney tissues of CIA mice. Collectively, the oral administration of honokiol inhibited CIA development by reducing the production of pro-inflammatory cytokines, MMP expressions, and oxidative stress. Thus, honokiol is an attractive candidate for an anti-arthritic agent.