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<i>Lindera obtusiloba</i> Blume (family, Lauraceae), native to Northeast Asia, has been used traditionally in the treatment of trauma and neuralgia. In this study, we investigated the neuroinflammatory effect of methanol extract of <i>L. obtusiloba</i> stem (LOS-ME) in a scopolamine-induced amnesia model and lipopolysaccharide (LPS)-stimulated BV2 microglia cells. LOS-ME downregulated the expression of inducible nitric oxide synthase (iNOS), cyclooxygenase (COX)-2, inflammatory cytokines, and inhibited the phosphorylation of nuclear factor kappa-B (NF-ĸB) and extracellular signal-regulated kinase (ERK) in LPS-stimulated BV2 cells. Male C57/BL6 mice were orally administered 20 and 200 mg/kg of LOS-ME for one week, and 2 mg/kg of scopolamine was administered intraperitoneally on the 8th day. In vivo behavioral experiments (Y-maze and Morris water maze test) confirmed that LOS-ME alleviated cognitive impairments induced by scopolamine and the amount of iNOS expression decreased in the hippocampus of the mouse brain. Microglial hyper-activation was also reduced by LOS-ME pretreatment. These findings suggest that LOS-ME might have potential in the treatment for cognitive improvement by regulating neuroinflammation.