In previous studies, withanolides isolated from Physalis peruviana were found to exhibit anti-inflammatory potential by suppressing nitrite production induced by lipopolysaccharide (LPS) treatment. Currently, we selected two of the most potent compounds, 4β-hydroxywithanolide E (1) and physalactone (2), to examine the underlying mechanism of action. With LPS-stimulated RAW 264.7 cells in culture, the compounds inhibited the mRNA and protein expression of iNOS and COX-2. To determine which upstream signaling proteins were involved in these effects, phosphorylation levels of three mitogen-activated protein kinases (MAPKs) including ERK1/2, JNK1/2, and p38, were examined, but found unaffected. Similarly, the degradation of IκBα was not attenuated by the compounds. However, phosphorylation of Akt at the Ser-473 residue was inhibited, as was the phosphorylation of STAT1. Interestingly, the compounds also reduced the protein level of total STAT1, possibly by ubiquitin-dependent protein degradation. In sum, these results indicate the potential of 1 and 2 to mediate anti-inflammatory effects through the unexpected mechanism of inhibiting the transcription of iNOS and COX-2 via Akt- and STAT1-related signaling pathways.