Papiliocin is a novel 37-residue cecropin-like peptide isolated recently from the swallowtail butterfly, Papilio xuthus. With the aim of identifying a potent antimicrobial peptide, we tested papiliocin in a variety of biological and biophysical assays, demonstrating that the peptide possesses very low cytotoxicity against mammalian cells and high bacterial cell selectivity, particularly against Gram-negative bacteria as well as high anti-inflammatory activity. Using LPS-stimulated macrophage RAW264.7 cells, we found that papiliocin exerted its anti-inflammatory activities by inhibiting nitric oxide (NO) production and secretion of tumor necrosis factor (TNF)-␣ and macrophage inflammatory protein (MIP)-2, producing effects comparable with those of the antimicrobial peptide LL-37. We also showed that the innate defense response mechanisms engaged by papiliocin involve Toll-like receptor pathways that culminate in the nuclear translocation of NF-B. Fluorescent dye leakage experiments showed that papiliocin targets the bacterial cell membrane. To understand structure-activity relationships, we determined the three-dimensional structure of papiliocin in 300 mM dodecylphosphocholine micelles by NMR spectroscopy, showing that papiliocin has an ␣-helical structure from Lys 3 to Lys 21 and from Ala 25 to Val 36 , linked by a hinge region. Interactions between the papiliocin and LPS studied using tryptophan blue-shift data, and saturation transfer difference-NMR experiments revealed that Trp 2 and Phe 5 at the N-terminal helix play an important role in attracting papiliocin to the cell membrane of Gram-negative bacteria. In conclusion, we have demonstrated that papiliocin is a potent peptide antibiotic with both anti-inflammatory and antibacterial activities, and we have laid the groundwork for future studies of its mechanism of action.