Alzheimer's disease (AD) is a progressive neurodegenerative disease associated with cognitive impairment and dementia, which has become a major public health problem. There are no effective therapeutic agents used to treat AD in clinic for the extremely complex pathogenesis. Here we identify Levistilide A (LA), one of the major active natural terpene lactone constituents from Chinese herbal medicine Angelicae sinensis and Chuanxiong Rhizoma, as a potent neuroinflammation inhibitor for neuroprotection and cognitive improvement of AD. We show that LA suppresses neuronal apoptosis, restores cholinergic system function, and lowers neuroinflammation in vivo to improve scopolamine (SCOP)-induced learning and memory deficits. In addition, LA inhibits the release of IL-1β, IL-6 and TNF-α, while increasing the production of IL-4 and IL-10 for anti-inflammatory effects in LPS or Aβ-induced BV2 and HMC3 cells. Furthermore, the conditioned medium (CM) from LA-treated BV2 or HMC3 cells enhances the viability of SH-SY5Y and HT-22 cells, and LA reverses M1 to M2 phenotype transformation of BV2 and HMC3 cells accompanied by the inhibited Iba-1 expression and mRNA level of IL-1β, IL-6, TNF-α and NOS2, and the increased expression of ARG1, CD206 and CD163. Mechanistically, we analyze JAK2/STAT3 signaling as possible targets of LA using network pharmacology approaches, and further experimentally validate that LA inhibits the phosphorylation of JAK2 and STAT3, and STAT3 expression within nucleus both in vitro and in vivo. Collectively, we identify LA as a potential neuroinflammation inhibitor for neuroprotection and cognitive improvement, which is expected to be a candidate for AD therapy.