To investigate the possible mechanism of the therapeutic action of propolis, we studied: (a) the effect of propolis, its components, caffeic acid phenethyl ester (CAPE), caffeic acid (CA), quercetin and naringenin, as well as the synthetic compounds indomethacin (IM) and nordihydroguaiaretic acid (NDGA), and a novel lipoxygenase inhibitor N,N'-dicyclohexyl-O-(3,4-dihydroxycinnamoyl)isourea (DCHCU) on eicosanoid production by mouse peritoneal macrophages in vitro; (b) the effect of IM, NDGA, CA, CAPE, DCHCU and propolis on eicosanoid production during acute inflammation in vivo; and (c) the ex vivo and in vivo effect of dietary propolis on arachidonic acid metabolism. The ethanol extract of propolis suppressed prostaglandin and leukotriene generation by murine peritoneal macrophages in vitro and during zymosan-induced acute peritoneal inflammation in vivo. Dietary propolis significantly suppressed the lipoxygenase pathway of arachidonic acid metabolism during inflammation in vivo. CAPE was the most potent modulator of the arachidonic acid cascade among the propolis components examined.