5β-Hydroxypalisadin B, a halogenated secondary metabolite isolated from red seaweed Laurencia snackeyi was evaluated for its anti-inflammatory activity in lipopolysaccharide (LPS)-induced zebrafish embryo. Preliminary studies suggested the effective concentrations of the compound as 0.25, 0.5, 1 μg/mL for further in vivo experiments. 5β-Hydroxypalisadin B, exhibited profound protective effect in the zebrafish embryo as confirmed by survival rate, heart beat rate, and yolk sac edema size. The compound acts as an effective agent against reactive oxygen species (ROS) formation induced by LPS and tail cut. Moreover, 5β-hydroxypalisadin B effectively inhibited the LPS-induced nitric oxide (NO) production in zebrafish embryo. All the tested protective effects of 5β-hydroxypalisadin B were comparable to the well-known anti-inflammatory agent dexamethasone. According to the results obtained, 5β-hydroxypalisadin B isolated from red seaweed L. snackeyi could be considered as an effective anti-inflammatory agent which might be further developed as a functional ingredient.