Melanoma is the most common type of skin cancer and its incidence is rapidly increasing. AKT, and its related signaling pathways, are highly activated in many cancers including lung, colon, and esophageal cancers. Costunolide (CTD) is a sesquiterpene lactone that has been reported to possess neuroprotective, anti-inflammatory, and anti-cancer properties. However, the target and mechanism underlying its efficacy in melanoma have not been identified. In this study, we elucidated the mechanism behind the anti-cancer effect of CTD in melanoma in vitro and in vivo by identifying CTD as an AKT inhibitor. We first verified that p-AKT and AKT are highly expressed in melanoma patient tissues and cell lines. CTD significantly inhibited the proliferation, migration, and invasion of melanoma cells including SK-MEL-5, SK-MEL-28, and A375 that are overexpressed p-AKT and AKT proteins. We investigated the mechanism of CTD using a computational docking modeling, pull-down, and site directed mutagenesis assay. CTD directly bound to AKT thereby arresting cell cycle at the G1 phase, and inducing the apoptosis of melanoma cells. In addition, CTD regulated the G1 phase and apoptosis biomarkers, and inhibited the expression of AKT/mTOR/GSK3b/p70S6K/4EBP cascade proteins. After reducing AKT expression in melanoma cells, cell growth was significantly decreased and CTD did not showed further inhibitory effects. Furthermore, CTD administration suppressed tumor growth and weight in cell-derived xenograft mice models in vivo without body weight loss and inhibited the expression of Ki-67, p-AKT, and p70S6K in tumor tissues. In summary, our study implied that CTD inhibited melanoma progression in vitro and in vivo. In this study, we reported that CTD could affect melanoma growth by targeting AKT. Therefore, CTD has considerable potential as a drug for melanoma therapy.