The aim of the present study was to identify the anti-inflammatory and anti-oxidative effects of peat moss aqueous extract (PME) on lipopolysaccharide (LPS)-stimulated RAW 264.7 macrophages. To demonstrate the anti-inflammatory and antioxidant effects of PME, the levels of nitric oxide (NO) and cytokines were measured using Griess reagent and cytokine ELISA kits, respectively. Reverse transcriptase-polymerase chain reaction (RT-PCR) and western blot analysis were conducted to evaluate the expression of genes and proteins. Immunofluorescence was used to measure the expression and translocation of transcription factors. Pre-treatment with PME inhibited the production of prostaglandin E(2) and NO by suppressing the gene expression of cyclooxygenase-2 and inducible NO synthase, respectively. The LPS-stimulated gene expression and the production of tumor necrosis factor-α and interleukin-1β were significantly reduced by PME. In the LPS-stimulated RAW 264.7 cells, nuclear factor‑κB (NF-κB) translocated from the cytosol to the nucleus, while pre-treatment with PME induced the sequestration of NF-κB in the cytosol through the inhibition of IκBα degradation. In the same manner, PME contributed to the inhibition of the activation of mitogen-activated protein kinases. In addition, the PME-treated RAW 264.7 cells facilitated the activation of nuclear factor-like 2 (Nrf2) , and in turn, enhanced heme oxygenase-1 (HO-1) expression. These results indicate that PME exerts anti-inflammatory and antioxidant effects, and suggest that PME may neutralize inflammation and prevent cellular damage by oxidative stress.