The inducible NO synthase gene (iNOS) plays a role in a number of chronic and acute conditions, including septic shock and contact hypersensitivity autoimmune diseases, such as rheumatoid arthritis, gastrointestinal disorders, and myocardial ischemia. The iNOS gene is primarily under transcriptional control and is induced in a variety of conditions. The ability to monitor and quantify iNOS expression in vivo may facilitate a better understanding of the role of iNOS in different diseases. In this study, we describe a transgenic mouse (iNos-luc) in which the luciferase reporter is under control of the murine iNOS promoter. In an acute sepsis model produced by injection of IFN-γ and LPS, we observed an induction of iNOS-driven luciferase activity in the mouse liver. This transgene induction is dose and time dependent and correlated with an increase of liver iNOS protein and iNOS mRNA levels. With this model, we tested 11 compounds previously shown to inhibit iNOS induction in vitro or in vivo. Administration of dexamethasone, epigallocatechin gallate, α-phenyl-N-tert-butyl nitrone, and ebselen significantly suppressed iNOS transgene induction by IFN-γ and LPS. We further evaluated the use of the iNos-luc transgenic mice in a zymosan-induced arthritis model. Intra-articular injection of zymosan induced iNos-luc expression in the knee joint. The establishment of the iNos-luc transgenic model provides a valuable tool for studying processes in which the iNOS gene is induced and for screening anti-inflammatory compounds in vivo.