Recent studies have demonstrated that transcription factor nuclear factor (NF)-κB inhibition may contribute to the protective anti-inflammatory actions of andrographolide, an abundant component of plants of the genus Andrographis. However, the precise mechanism by which andrographolide inhibits NF-κB signaling remains unclear. We thus investigated the mechanism involved in andrographolide suppression of NF-κB signaling in rat vascular smooth muscle cells (VSMCs) exposed to proinflammatory stimuli, LPS, and IFN-γ. Andrographolide was shown to suppress LPS/IFN-γ-induced inducible nitric-oxide synthase and matrix metalloprotease 9 expression in rat VSMCs. Andrographolide also inhibited LPS/IFN-γ-induced p65 nuclear translocation, DNA binding activity, p65 Ser(536) phosphorylation, and NF-κB reporter activity. However, IKK phosphorylation and downstream inhibitory κBα phosphorylation and degradation were not altered by the presence of andrographolide in LPS/IFN-γ-stimulated VSMCs. These andrographolide inhibitory actions could be prevented by selective inhibition of neutral sphingomyelinase and protein phosphatase 2A (PP2A). Furthermore, andrographolide was demonstrated to increase ceramide formation and PP2A activity in VSMCs and to inhibit neointimal formation in rat carotid injury models. These results suggest that andrographolide caused neutral sphingomyelinase-mediated ceramide formation and PP2A activation to dephosphorylate p65 Ser(536), leading to NF-κB inactivation and subsequent inducible nitric-oxide synthase down-regulation in rat VSMCs stimulated by LPS and IFN-γ.