Microglia are the major cell type involved in neuroinflammatory events in brain diseases such as encephalitis, stroke, and neurodegenerative disorders, and contribute significantly to the release of prostaglandins (PGs) during neuronal insults. In this report, we studied the immediate-early intracellular signalling pathways in microglia, following bacterial lipopolysaccharide (LPS) stimulation, leading to the synthesis and release of PGE2. Here we show that LPS induces cyclooxygenase (COX) 2 by activating sphingomyelinases leading to the release of ceramides, which in turn, activate the p38 mitogen-activated protein kinases (MAPK), but not the p42/44 MAPK. We further show that exogenously added ceramide analogue (C2-ceramide) also induce PGE2 synthesis through a p38 MAPK-dependent pathway. This potential nature of ceramides in activating microglia suggests that endogenously produced ceramides during neuronal apoptosis in ischemia or neurodegenerative diseases could also contribute to the amplification of neuroinflammatory events. In contrast to protein kinase C (PKC) and phosphocholine-specific phospholipase C (PC-PLC), which transcriptionally regulate LPS-induced COX-2 synthesis, inhibition of phospholipase A2 (PLA2) has no effect on COX-2 transcription, although it inhibits the release of PGE2. Transcriptional regulation of LPS-induced COX-2 by PKC is further proved by the ability of the PKC inhibitor, Gö 6976, to inhibit LPS-induced 8-isoprostane synthesis, but not affecting LPS-induced COX-2 activity. Our data with 8-isoprostane also indicates that COX-2 plays a major role in ROS production in LPS-activated microglia. This detailed view of the intracellular signaling pathway in microglial activation and COX-2 expression opens a new therapeutic window in the search for new and more effective central anti-inflammatory agents.