In this study, the egg yolk livetins (α, β, and γ-livetin) fraction and its hydrolysates, prepared by pepsin and Alcalase, were evaluated for their anti-inflammatory effects using lipopolysaccharide (LPS)-induced RAW 264.7 macrophages as an in vitro model. Enzymatic hydrolysis by pepsin and Alcalase successfully transformed the large molecular weight livetins into low molecular mass peptides mostly below 10kDa. Results revealed that livetins and its hydrolysates (peptides) treatment significantly reduced the inflammatory responses as evidenced by inhibition of production of nitric oxide (NO) (22.7-39.2%), pro-inflammatory cytokines such as tumor necrosis factor-α (TNF-α) (36.9-43.2%), interleukin-1β (IL-1β) (26.1-50.9%) and interleukin-6 (IL-6) (60.4-69.0%), and the expression of inducible nitric oxide synthase (iNOS) (58.6-62%). Alcalase hydrolysate showed more effects in inhibiting prostaglandin-E2 (PGE2) production (30.3%) as well as expression of cyclooxygenase-2 (COX-2) (55.7%). In addition, effect of livetins and its hydrolysates on phagocytic capacity of the macrophages was also evaluated. The results indicate that livetins and its enzymatic hydrolysates significantly (p<0.001, 0.05) enhanced the phagocytic activity of the macrophages. The results suggest that egg yolk livetins and its hydrolysates with anti-inflammatory activity can potentially be used in health food/nutraceutical/pharmaceutical industry for various applications.