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Paraoxonase 1 (PON1) is an antioxidant enzyme which plays a central role in various diseases. However, the mechanism and function of PON1 protein in inflammation are poorly understood. Since PON1 protein alone cannot be delivered into cells, we generated a cell permeable PEP-1-PON1 protein using protein transduction domains, and examined whether it can protect against cell death in lipopolysaccharide (LPS) or hydrogen peroxide (H2O2)-treated Raw 264.7 cells as well as mice with 12-O-tetradecanoyl phorbol-13-acetate (TPA)-induced skin inflammation. We demonstrated that PEP-1-PON1 protein transduced into Raw 264.7 cells and markedly protected against LPS or H2O2-induced cell death by inhibiting cellular reactive oxygen species (ROS) levels, the inflammatory mediator's expression, activation of mitogen-activated protein kinases (MAPKs) and cellular apoptosis. Furthermore, topically applied PEP-1-PON1 protein ameliorates TPA-treated mice skin inflammation via a reduction of inflammatory response. Our results indicate that PEP-1-PON1 protein plays a key role in inflammation and oxidative stress in vitro and in vivo. Therefore, we suggest that PEP-1-PON1 protein may provide a potential protein therapy against oxidative stress and inflammation.