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.