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Non-resolving pancreatic islet inflammation is widely viewed as a contributor to decreases in β-cell mass and function that occur in both Type 1 and Type 2 diabetes. Therefore, strategies aimed at reducing or eliminating pathological inflammation would be useful to protect islet β-cells. Herein, we described the use of 2′,4′-dihydroxy-4-methoxydihydrochalcone (DMC2), a bioactive molecule isolated from an ethanolic extract of <i>Artemisia dracunculus</i> L., as a novel anti-inflammatory agent. The ethanolic extract, termed PMI 5011, reduced IL-1β-mediated NF-κB activity. DMC2 retained this ability, indicating this compound as the likely source of anti-inflammatory activity within the overall PMI 5011 extract. We further examined NF-κB activity using promoter-luciferase reporter constructs, Western blots, mRNA abundance, and protein secretion. Specifically, we found that PMI 5011 and DMC2 each reduced the ability of IL-1β to promote increases in the expression of the <i>Ccl2</i> and <i>Ccl20</i> genes. These genes encode proteins that promote immune cell recruitment and are secreted by β-cells in response to IL-1β. Phosphorylation of IκBα and the p65 subunit of NF-κB were not reduced by either PMI 5011 or DMC2; however, phosphorylation of p38 MAPK was blunted in the presence of DMC2. Finally, we observed that while PMI 5011 impaired glucose-stimulated insulin secretion, insulin output was preserved in the presence of DMC2. In conclusion, PMI 5011 and DMC2 reduced inflammation, but only DMC2 did so with the preservation of glucose-stimulated insulin secretion.