Macrophage is the important cell for the immune system. Many of herbal drugs were searched about their immune-modulating activity. The purpose of this study is to investigate the biological effect of water extract from ARTEMISIAE ARGI FOLIUM (WAAF) on mouse macrophage Raw 264.7 cells. ARTEMISIAE ARGI FOLIUM was known to have the antibacterial, immune-enhancing, and anticoagulative properties. Cytotoxicity of WAAF was verified by MTT assay. The intracellular production of hydro peroxide ($H_2O_2$) by WAAF was examined. The productions of nitric oxide (NO) and $TNF-{alpha}$ from Raw 264.7 cell by WAAF were also examined. WAAF showed no cytotoxicity on RAW 264.7 cells for 3 hours. WAAF increased the production of $H_2O_2$ in Raw 264.7 cells. WAAF decrease the production of NO from the cells at low concentrations but increased at high concentrations. WAAF increased the production of $TNF-{alpha}$ from the cells. Therefore, It could be suggested that WAAF has the immune-modulating effect.