N-Arylphthalimides (1-10P) derived from thalidomide by insertion of hydrophobic groups were evaluated for anti-inflammatory activity, and (4-(1,3-dioxo-1,3-dihydro-2H-isoindol-2-yl)-N'-[(4-ethoxyphenyl)methylidene]benzohydrazide 6P was identified as a promising anti-inflammatory agent. Further testing confirmed that compared with the control, 6P treatment resulted in a considerable decrease in CD4(+), NF-κB p65(+), TNF-α(+), IL-6(+), GITR(+), and IL-17(+) cell populations and an increase in the Foxp3(+), CD4(+)Foxp3(+), and IκBα(+) populations in whole blood and pleural fluid of a mouse model of lung inflammation. Moreover, treatment with compound 6P decreased the proteins associated with inflammation including TNF-α, IL-6, IL-17, GITR, NF-κB, COX-2, STAT-3, and iNOS and increased the anti-inflammatory mediators such as IL-10 and IL-4. Further, histopathological examination confirmed the potent anti-inflammatory effects of compound 6P. Thus, the N-arylphthalimide derivative 6P acts as a potent anti-inflammatory agent in the carrageenan-induced lung inflammation model, suggesting that this compound may be useful for the treatment of inflammation in a clinical setting.