Avian eggshell membrane (ESM) is a natural biomaterial that has been used as an alternative natural bandage on burned and cut skin injuries for >400 years in Asian countries, and is available in large quantities from egg industries. Our aim was to characterize ESM that was separated and processed from egg waste, and to study whether this material possesses anti-inflammatory properties, making it suitable as an ingredient in industrial production of low cost wound healing products. Our results show that the processed ESM particles retain a fibrous structure similar to that observed for the native membrane, and contain collagen, and carbohydrate components such as hyaluronic acid and sulfated glycosaminoglycans, as well as N-glycans, mostly with uncharged structures. Furthermore, both processed ESM powder and the ESM-derived carbohydrate fraction had immunomodulation properties in monocytes and macrophage-like cells. Under inflammatory conditions induced by lipopolysaccharide, the ESM powder and the isolated carbohydrate fraction reduced the activity of the transcription factor nuclear factor-κB. The expression of the immune regulating receptors toll-like receptor 4 and ICAM-1, as well as the cell surface glycoprotein CD44, all important during inflammation response, were down-regulated by these fractions. Interestingly, our experiments show that the two fractions regulated cytokine secretion differently: ESM depressed inflammation by increased secretion of the anti-inflammatory cytokine IL-10 while the carbohydrate fraction reduced secretions of the pro inflammatory cytokines IL-1β and IL-6. Also, the phosphorylation of p65 and p50 subunits of nuclear factor-κB, as well as nuclear localization, differed between processed ESM powder and carbohydrate fraction, suggesting different down-stream regulation during inflammation. In conclusion, processed ESM powder and its soluble carbohydrate components possess anti-inflammatory properties, demonstrating the potential of ESM as a novel biological wound dressing for treatment of chronic inflammatory wounds.