Chronic activation of microglial cells endangers neuronal survival through the release of various proinflammatory and neurotoxic factors. Paeoniflorin (PF), a water-soluble monoterpene glycoside found in the root of Paeonia lactiflora Pall, has a wide range of pharmacological functions, such as anti-oxidant, anti-inflammatory, and anti-cancer effects. Neuroprotective potential of PF has also been demonstrated in animal models of neuropathologies. Here, we have examined the efficacy of PF in the repression of inflammation-induced neurotoxicity and microglial inflammatory response. In organotypic hippocampal slice cultures, PF significantly blocked lipopolysaccharide (LPS)-induced hippocampal cell death and productions of nitric oxide (NO) and interleukin (IL)-1 beta. PF also inhibited the LPS-stimulated productions of NO, tumor necrosis factor-alpha, and IL-1 beta from primary microglial cells. These results suggest that PF possesses neuroprotective activity by reducing the production of proinflammatory factors from activated microglial cells.