Bacterial lipopolysaccharide (LPS) induces expression of pro-inflammatory cytokines and enzymes producing nitric oxide (NO) and prostaglandins (PGs) in immune cells. This process is mediated by the activation of nuclear factor kappaB (NF-${kappa}B$). In this study, we investigated the anti-inflammatory characteristics of Codium fragile ethanolic extract (CFE) mediated by the regulation of inducible nitric oxide synthase (iNOS) and cyclooxygenase-2 (COX-2) using LPS-stimulated murine macrophage RAW 264.7 cells. CFE significantly inhibited LPS-induced NO and $PGE_2$ production in a dose-dependent manner and suppressed the expression of iNOS and COX-2 proteins in LPS-stimulated RAW 264.7 cells with no cytotoxicity. Pro-inflammatory cytokines, such as interleukin (IL)-$1{eta}$, IL-6, and tumor necrosis factor-${alpha}$, were significantly reduced by treatment of CFE in LPS-stimulated RAW 264.7 cells. CFE inhibited the promoter activity of (NF)-${kappa}B$ in LPS-stimulated macrophages. Treatment with CFE suppressed translocation of the NF-${kappa}B$ p65 subunit by preventing proteolytic degradation of inhibitor of ${kappa}B-{alpha}$. These results indicate that the CFE-mediated inhibition of NO and $PGE_2$ production in LPS-stimulated RAW 264.7 cells is mediated through the NF-${kappa}B$-dependent transcriptional downregulation of iNOS and COX-2, suggesting the potential of CFE as a nutraceutical with anti-inflammatory activity.