The molecular mechanism by which apolipoprotein E (apoE) suppresses inflammatory cytokine and NO production is unknown. Using an affinity purification approach, we found that peptide mimetics of apoE, derived from its receptor binding domain residues 130-150, bound to the SET protein, which is a potent physiological inhibitor of protein phosphatase 2A (PP2A). Both holo-apoE protein and apoE-mimetic peptides bound to the C-terminal region of SET, which is then associated with an increase in PP2A-mediated phosphatase activity. As physiological substrates for PP2A, the LPS-induced phosphorylation status of signaling MAPK and Akt kinase is reduced following treatment with apoE-mimetic peptides. On the basis of our previous report, in which apoE-mimetic peptides reduced I-κB kinase and NF-κB activation, we also demonstrate a mechanism for reduced production of inducible NO synthase protein and its NO product. These data provide evidence for a novel molecular mechanism by which apoE and apoE-mimetic peptides antagonize SET, thereby enhancing endogenous PP2A phosphatase activity, which reduces levels of phosphorylated kinases, signaling, and inflammatory response.