Human osteosarcoma is an aggressive tumor which frequently resists chemotherapy; therefore, the search for new agents for its treatment is of great importance. Isoalantolactone, isolated from Inula spp., has been reported to inhibit the growth of several types of cancer cells. However, no prior research has been conducted to demonstrate the antiproliferative potential of isoalantolactone on osteosarcoma. The present study is the first to investigate the effects of isoalantolactone on cell viability in human osteosarcoma U2OS, MG-63 and Saos-2 cells, and its mechanism of action in U2OS cells. Our results demonstrated that isoalantolactone triggered S and mainly G2/M cell cycle phase arrest, accompanied by the downregulation of the expression of cyclin B1 at the protein and mRNA levels. Moreover, isoalantolactone induced apoptosis that was associated with reactive oxygen species (ROS) generation and the dissipation of mitochondrial membrane potential (MMP). Furthermore, our results indicated that this compound upregulated DR5, FADD and cleaved caspase-8, increased the interation between DR5 and FADD, and inhibited the expression of nuclear NF-κBp65. We also found that isoalantolactone-induced apoptosis was associated with the downregulation of Bcl-2 and upregulation of Bax, which finally led to the activation of caspase-3 and its downstream substrate, PARP, in osteosarcoma U2OS cells. Isoalantolactone-induced apoptosis was markedly abrogated when the cells were pretreated with N-acetylcysteine (NAC), a specific ROS inhibitor, suggesting that the apoptosis-inducing effect of isoalantolactone in osteosarcoma cells was mediated by reactive oxygen species. Taken together, our data demonstrated that isoalantolactone induces ROS-dependent apoptosis in U2OS cells via a novel mechanism involving inhibition of NF-κBp65 and provide the rationale for further in vivo and preclinical investigation of isoalantolactone against osteosarcoma.