Hericium erinaceum is a medicinal and edible mushroom with anti-microbial and anti-cancer activities. To evaluate the immunoregulatory functions of H. erinaceum, we prepared water extract from H. erinaceum (WEHE) and investigated its ability to activate macrophages and to induce nitric oxide (NO) production in macrophages. Rat peritoneal macrophages stimulated with 1 to 100 μg/ml of WEHE for 24, 48, or 72 h produced NO in a time- and dose-dependent manner. Reverse transcription-polymerase chain reaction demonstrated that WEHE augmented the steady-state level of inducible NO synthase (iNOS) mRNA in both the peritoneal macrophages and a murine macrophage cell-line, RAW 264.7. Electrophoretic mobility shift assay showed that WEHE increased DNA binding activity of the transcription factor NF-κB, which is responsible for iNOS gene expression. Furthermore, its trans-acting activity was confirmative as determined by in vitro transfection assay using a reporter gene construct, p(NF-κB)3-CAT, whose expression is solely regulated by the activity of NF-κB. Concomitantly with the activation of NF-κB, WEHE markedly decreased intracellular IκBα level as demonstrated by Western blot assay. These results suggested that WEHE induces iNOS gene expression followed by NO production in macrophages via enhancing the activation of transcription factor, NF-κB.