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Objectives Niloticin is an active compound isolated from Cortex phellodendri with uncharacterized anti-inflammatory activity. We assessed the drug potential of niloticin and examined its ability to target myeloid differentiation protein 2 (MD-2) to ascertain the mechanism for its anti-inflammatory activity. Methods The Traditional Chinese Medicine Systems Pharmacology Database was used to evaluate niloticin. Bio-layer interferometry and molecular docking technologies were used to explore how niloticin targets MD-2, which mediates a series of toll-like receptor 4 (TLR4)-dependent inflammatory responses. The cytokines involved in the lipopolysaccharide (LPS)-TLR4/MD-2-NF-κB pathway were evaluated using ELISA, RT-qPCR, and western blotting. Results Niloticin could bind to MD-2 and had no evident effects on cell viability. Niloticin treatment significantly decreased the levels of NO, IL-6, TNF-α, and IL-1β induced by LPS (p < 0.01). IL-1β, IL-6, iNOS, TNF-α, and COX-2 mRNA expression levels were decreased by niloticin (all p < 0.01). Compared with that in the control group, the increase in TLR4, p65, MyD88, p-p65, and iNOS expression levels induced by LPS were suppressed by niloticin (all p < 0.01). Conclusion Our results suggest that niloticin has therapeutic potential and binds to MD-2. Niloticin binding to MD-2 antagonized the effects of LPS binding to the TLR4/MD-2 complex, resulting in the inhibition of the LPS-TLR4/MD-2-NF-κB signaling pathway.