While it has long been known that inflammation and infection reduce expression of hepatic cytochrome P450 (CYP) genes involved in xenobiotic metabolism and that exposure to xenobiotic chemicals can impair immune function, the molecular mechanisms underlying both of these phenomena have remained largely unknown. Here we show that activation of the nuclear steroid and xenobiotic receptor (SXR) by commonly used drugs in humans inhibits the activity of NF-kappaB, a key regulator of inflammation and the immune response. NF-kappaB target genes are upregulated and small bowel inflammation is significantly increased in mice lacking the SXR ortholog pregnane X receptor (PXR), thereby demonstrating a direct link between SXR and drug-mediated antagonism of NF-kappaB. Interestingly, NF-kappaB activation reciprocally inhibits SXR and its target genes whereas inhibition of NF-kappaB enhances SXR activity. This SXR/PXR-NF-kappaB axis provides a molecular explanation for the suppression of hepatic CYP mRNAs by inflammatory stimuli as well as the immunosuppressant effects of xenobiotics and SXR-responsive drugs. This mechanistic relationship has clinical consequences for individuals undergoing therapeutic exposure to the wide variety of drugs that are also SXR agonists.