Objective and Design: To evaluate potential anti-inflammatory properties of tea tree oil, the essential oil steam distilled from the Australian native plant, Melaleuca alternifolia. Material and Methods: The ability of tea tree oil to reduce the production in vitro of tumour necrosis factor-α (TNFα), interleukin (IL)-1β, IL-8, IL-10 and prostaglandin E2 (PGE2) by lipopolysaccharide (LPS)-activated human peripheral blood monocytes was examined. Results: Tea tree oil emulsified by sonication in a glass tube into culture medium containing 10% fetal calf serum (FCS) was toxic for monocytes at a concentration of 0.016% v/v. However, the water soluble components of tea tree oil at concentrations equivalent to 0.125% significantly suppressed LPS-induced production of TNFα, IL-1β and IL-10 (by approximately 50%) and PGE2 (by approximately 30%) after 40 h. Gas chromatography/mass spectrometry identified terpinen-4-ol (42%), α-terpineol (3%) and 1,8-cineole (2%, respectively, of tea tree oil) as the water soluble components of tea tree oil. When these components were examined individually, only terpinen-4-ol suppressed the production after 40 h of TNFα, IL-1β, IL-8, IL-10 and PGE2 by LPS-activated monocytes. Conclusion: The water-soluble components of tea tree oil can suppress pro-inflammatory mediator production by activated human monocytes.