Nuclear factor-κB (NF-κB) plays a central role in pathogenesis of inflammation and cancer. Many phytochemicals including gamma-tocotrienol (γTE), a natural form of vitamin E, have been shown to inhibit NF-κB activation, but the underlying mechanism has not been identified. Here we show that γTE inhibited cytokine-triggered activation of NF-κB and its upstream regulator TGFβ-activated kinase-1 in murine RAW264.7 macrophages and primary bone marrow-derived macrophages. In these cells, γTE induced up-regulation of A20, an inhibitor of NF-κB. Knockout of A20 partially diminished γTE’s anti-NF-κB effect but γTE increased another NF-κB inhibitor Cezanne in A20−/− cells. In search of the reason for A20 upregulation, we found that γTE treatment increased phosphorylation of translation initiation factor 2 (eIF2α), IκBα and JNK, indicating induction of endoplasmic reticulum (ER) stress. LC-MS/MS analyses revealed that γTE modulated sphingolipids including enhancement of intracellular dihydroceramides, sphingoid bases in de novo synthesis of sphingolipid pathway. Chemical inhibition of de novo sphingolipid synthesis partially reversed γTE’s induction of A20 and anti-NF-κB effect. The importance of dihydroceramide increase is further supported by the observation that C8-dihydroceramide mimicked γTE in up-regulating A20, enhancing ER stress and attenuating TNF-triggered NF-κB activation. Our study identifies a novel anti-NF-κB mechanism where A20 is induced by stress-induced adaptive response as a result of modulation of sphingolipids, and demonstrates an immune-modulatory role of dihydrocermides.