Ruta graveolens (Rue) is a well-known medicinal plant having anti-inflammatory and other healing properties. This contains many active phytochemicals such as coumarins which possess anti-inflammatory and anti-cancer activities. The present study was carried out to evaluate the therapeutic potential of a newly isolated coumarin derivative from rue plant, 8-methoxy-chromen-2-one (MCO) in the collagen induced arthritic (CIA) rat model. MCO showed inhibition of cytokines and NF-κB in LPS stimulated J774 cells which prompted its possible use in animal. In CIA, arthritic index and arthritic score reduced markedly within 15 days of MCO treatment at doses of 2 mg and 20 mg per kg body weight. Alleviation of joint damage in CIA animals on treatment with MCO was evident from radiographic and histological data. Behavioral studies by open field tests also showed convalescence in the MCO treated CIA rats. Further, escalated plasma levels of pro-inflammatory cytokines TNF-α, IL-1β and IL-6, and also nitric oxide reduced significantly with the treatment. All these results indicate the therapeutic efficacy of MCO and its possible use as an anti-arthritic drug.