Melatonin, which plays an important role in circadian rhythm regulation, is highly potent endogenous free radical scavenger and antioxidant. To determine the efficacy of melatonin in neuroinflammation induced by intracerebroventricular (i.c.v.) administration of lipopolysachcharide (LPS, 50µg), pro-inflammatory cytokines (TNF-α and IL-1β), and markers of oxidative stress (malondialdehyde and reduced glutathione) were studied in different brain regions (striatum, cerebral cortex, hippocampus and hypothalamus) of rat. To study the cholinergic intervention during neuroinflammatory conditions acetylcholinesterase (AChE) enzyme activity was taken as marker of cholinergic activity. Melatonin (5 and 10mg/kg, p.o.) decreased the LPS induced pro-inflammatory cytokines and oxidative stress in different brain regions. It was also found to inhibit the LPS induced increase in AChE activity. These results suggest the therapeutic potential of melatonin for neuroinflammation which is an integral part of neurodegenerative disorders.