Annexin A1 (ANXA1), a mediator of the anti-inflammatory action of glucocorticoids, is important in cancer development and progression, whereas NF-kappaB regulates multiple cellular phenomena, some of them associated with inflammation and cancer. We showed that glucocorticoids and chemopreventive modified nonsteroidal anti-inflammatory drugs, such as nitric oxide-donating aspirin (NO-ASA) and phospho-aspirin, induced ANXA1 in cultured human colon and pancreatic cancer cells. ANXA1 associated with NF-kappaB and suppressed its transcriptional activity by preventing NF-kappaB binding to DNA. The induction of ANXA1 by glucocorticoids was proportional to their anti-inflammatory potency, as was the suppression of NF-kappaB activity, which was accompanied by enhanced apoptosis and inhibition of cell growth mediated by changes in NF-kappaB-dependent cell signaling. The proposed novel mechanism was operational in the intestinal mucosa of mice treated with dexamethasone or NO-ASA. ANXA1-based oligopeptides displayed the same effects as ANXA1 on NF-kappaB. One such tripeptide (Gln-Ala-Trp) administered to nude mice inhibited the growth of SW480 human colon cancer xenografts by 58% compared with control (P < 0.01). Our findings reveal that ANXA1 is an inducible endogenous inhibitor of NF-kappaB in human cancer cells and mice, provide a novel molecular mechanism for the action of anti-inflammatory agents, and suggest the possibility of mechanism-driven drug development.