Background and purpose:5α,8α‐Epidioxy‐22E‐ergosta‐6, 22‐dien‐3β‐ol (ergosterol peroxide) is a major antitumour sterol produced by edible or medicinal mushrooms. However, its molecular mechanism of action has yet to be determined. Here, we examine the anticancer and anti‐inflammatory effects of ergosterol peroxide.Experimental approach:After treating RAW264.7 macrophages with LPS and purified ergosterol peroxide or ergosterol, we determined LPS‐induced inflammatory cytokines, nuclear DNA binding activity of transcription factors and phosphorylation of MAP kinases (MAPKs). HT29 colorectal adenocarcinoma cells were treated with ergosterol peroxide for 5 days. To investigate the antitumour properties of ergosterol peroxide, we performed DNA microarray and RT‐PCR analyses and determined the reactive oxygen species (ROS) in HT29 cells.Key results:Ergosterol peroxide suppressed LPS‐induced TNF‐α secretion and IL‐1α/β expression in RAW264.7 cells. Ergosterol peroxide and ergosterol suppressed LPS‐induced DNA binding activity of NF‐κB and C/EBPβ, and inhibited the phosphorylation of p38, JNK and ERK MAPKs. Ergosterol peroxide down‐regulated the expression of low‐density lipoprotein receptor (LDLR) regulated by C/EBP, and HMG‐CoA reductase (HMGCR) in RAW264.7 cells. In addition, ergosterol peroxide showed cytostatic effects on HT29 cells and increased intracellular ROS. Furthermore, ergosterol peroxide induced the expression of oxidative stress‐inducible genes, and the cyclin‐dependent kinase inhibitor CDKN1A, and suppressed STAT1 and interferon‐inducible genes.Conclusion and Implication:Our results suggest that ergosterol peroxide and ergosterol suppress LPS‐induced inflammatory responses through inhibition of NF‐κB and C/EBPβ transcriptional activity, and phosphorylation of MAPKs. Moreover, ergosterol peroxide appears to suppress cell growth and STAT1 mediated inflammatory responses by altering the redox state in HT29 cells.British Journal of Pharmacology (2007) 150, 209–219. doi:10.1038/sj.bjp.0706972