Prostaglandins and nitric oxide (NO) are among the numerous substances released by activated microglial cells, the brain resident macrophages, and they mediate several important microglial functions. We have previously shown that cyclooxygenase-2 (COX-2) and inducible NO synthase (iNOS), the two key enzymes in prostaglandin and NO synthesis, respectively, are rapidly co-induced in rat neonatal microglial cultures activated by bacterial endotoxin (lipopolysaccharide [LPS]) and that COX-2 expression appears to be under the negative control of endogenous as well as exogenous NO. In this study we show that exogenous prostaglandin E2 (PGE2), which is known to increase cyclic adenosine monophosphate (cAMP) levels in microglial cells, downregulates LPS-induced iNOS expression in a dose-dependent manner. The involvement of cAMP in the PGE2-dependent inhibition of iNOS is supported by several pieces of evidence. First, iNOS expression was also inhibited by agents such as isoproterenol and forskolin, which cause an elevation of cAMP levels, and by dibutyryl cAMP (dbcAMP), a cAMP stable analogue. Second, the inhibitory effect of PGE2 was mimicked by 11-deoxy-16,16-dm PGE2, a selective agonist at the PGE2 receptor subtype EP2, coupled to the activation of adenylyl cyclase, but not by sulprostone, a potent agonist at receptor subtypes EP3 and EP1, associated with an inhibition of adenylyl cyclase activity and intracellular Ca2+ elevation, respectively. Third, the inhibitory effect of PGE2 on NO synthesis was blocked by SQ 22,536, a specific inhibitor of adenylyl cyclase. Interestingly, the abrogation of endogenous prostanoid production by several COX inhibitors caused a reduction of iNOS expression, suggesting a positive modulatory effect of endogenous prostanoids of iNOS expression, as opposed to the inhibitory effect of exogenous PGE2.