SC-E3 is a novel herbal formula composed of five oriental medicinal herbs that are used to treat a wide range of inflammatory diseases in Korean traditional medicine. In this study, we sought to determine the effects of SC-E3 on free radical generation and inflammatory response in lipopolysaccharide- (LPS-) treated RAW 264.7 macrophages and the molecular mechanism involved. The ethanol extract of SC-E3 showed good free radical scavenging activity and inhibited LPS-induced reactive oxygen species generation. SC-E3 significantly inhibited the production of the LPS-induced inflammatory mediators, nitric oxide and prostaglandin E2, by suppressing the expressions of inducible nitric oxide synthase and cyclooxygenase-2, respectively. SC-E3 also prevented the secretion of the proinflammatory cytokines, IL-1β, TNF-α, and IL-6, and inhibited LPS-induced NF-κB activation and the mitogen-activated protein kinase (MAPK) pathway. Furthermore, SC-E3 induced the expression of heme oxygenase-1 (HO-1) by promoting the nuclear translocation and transactivation of Nrf2. Taken together, these results suggest that SC-E3 has potent antioxidant and anti-inflammatory effects and that these effects are due to the inhibitions of NF-κB and MAPK and the induction of Nrf2-mediated HO-1 expression in macrophages. These findings provide scientific evidence supporting the potential use of SC-E3 for the treatment and prevention of various inflammatory diseases.