Natural compounds and their synthesized analogues continue to be valuable sources in the discovery and development of novel anti-inflammatory agents. AL-04 is a thiol analogue derived from a natural sesquiterpene alantolactone, that demonstrated potential anti-inflammatory activity in vitro in comparison to its parent compound. However, the anti-inflammatory mechanism of action of AL-04 has not been elucidated. In this context, we investigated the signaling pathway that primarily mediate the anti-inflammatory activity of AL-04 and its effect on principal inflammatory mediators including iNOS, COX-2 and ROS. Furthermore, the anti-inflammatory activity was investigated in vivo in carrageenan induced paw oedema model in addition to the exploration of anti-nociceptive activity and acute toxicity. The results suggested that treatment with AL-04 significantly decreased the LPS-induced upregulation of pro-inflammatory cytokines and mediators in addition to the downregulated transcription of TNF-α and IL-6 in RAW 264.7 cell line. Furthermore, mRNA and the protein expression of COX-2 and iNOS were also significantly attenuated with AL-04 at a concentration of 10 µM. Western blot studies further suggested that AL-04 downregulated LPS-stimulated NF-κB p65 expression. In addition to this the anti-inflammatory activity of AL-04 was demonstrated in carrageenan induced paw oedema model with significant inhibition of oedema in a dose-dependent manner. The anti-inflammatory activity of AL-04 was further demonstrated in balb/c mice by inhibition of leukocyte migration and vascular permeability. Besides, AL-04 also inhibited thermally and chemically induced pain in tail-flick and acetic acid induced writing assays respectively in balb/c mice suggesting the analgesic potential of the compound. Acute toxicity studies further suggested the appreciable safety of AL-04 at high dose of 2000 mg/kg with no indications of toxicity or changes in biochemical and haematological parameters. Overall, the study insinuates the anti-inflammatory potential of AL-04 and paves way for further exploration of the compound as a safer therapeutic anti-inflammatory agent.