Nicotine is the principal alkaloid of tobacco often manufactured into cigarettes and belongs to a highly addictive class of drugs. Nicotine attenuates the neuroinflammation induced by microglial activation. However, the molecular target(s) underlying anti-inflammatory action of nicotine has not been fully understood. Considering the psychoactive substances morphine, cocaine, and methamphetamine act as xenobiotic-associated molecular patterns and can be specifically sensed by the innate immune receptor Toll-like receptor 4 (TLR4), here we sought to delineate whether nicotine and/or its metabolite cotinine may be recognized by the innate immune system via myeloid differentiation protein 2 (MD2), an accessory protein of TLR4 that is responsible for ligand recognition. MD2-intrinsic fluorescence titrations, surface plasmon resonance, and competitive displacement binding assays with curcumin (MD2 probe) demonstrated that both nicotine and cotinine targeted the lipopolysaccharide (LPS; TLR4 agonist) binding pocket of MD2 with similar affinities. The cellular thermal shift assay indicated that nicotine binding increased, while cotinine binding decreased, MD2 stability. These biophysical binding results were further supported by in silico simulations. In keeping with targeting MD2, both nicotine and cotinine inhibited LPS-induced production of nitric oxide and tumor necrosis factor alpha (TNF-α) and blocked microglial activation. Neither a pan nicotinic acetylcholine receptor (nAChR) inhibitor nor RNAi for nAChRs abolished the suppressive effect of nicotine- and cotinine-induced neuroinflammation. These data indicate that TLR4 inhibition by nicotine and cotinine at the concentrations tested in BV-2 cells is independent of classic neuronal nAChRs and validate that MD2 is a direct target of nicotine and cotinine in the inhibition of innate immunity.