Keratitis is a worldwide sight-threatening disease. Current drugs generate various adverse effects. Large molecules hardly penetrate ocular tissues. Small peptides derived from endogenous protein display certain advantages. Previously we indentified a novel peptide (PAPep) from human pancreatitis-associated protein (PAP), a protein with protective effect against inflammatory diseases. To further examine the effect of PAPep on inflammatory disease and expand its scope of potential clinical application, especially in keratitis, we tested the effect of PAPep on various aspects of lipopolysaccharide (LPS)—induced corneal inflammation in vivo and in vitro. Dexamethasone (DXM) was used as a drug control. Our results suggested that PAPep suppressed the clinical manifestation, histological disorder and inflammatory cells infiltration and reduced the release of interleukin (IL)-6, IL-8 and monocyte chemotactic protein (MCP)-1 in the cornea. Moreover, PAPep inhibited LPS-induced mRNA and protein expression of the three cytokines in the corneal fibroblasts, prevented translocation of NF–κB and interrupted the phosphorylation of IKKα/β/IκBα/NF–κB. Our study demonstrates that PAPep could effectively attenuate LPS-induced keratitis, more likely by virtue of inhibiting the activation of the IKKα/β/IκBα/NF–κB pathway. PAPep may be considered to be a promising and safe drug for therapeutic application for ocular inflammation.