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Paracetamol produces analgesic and antipyretic effects primarily through action in the central nervous system. It relieves pain by inhibiting the formation of pain-producing prostaglandins and raising the pain threshold. Its fever-reducing action occurs through inhibition of the hypothalamic heat-regulating center, promoting heat loss through vasodilation and sweating.

Unlike NSAIDs, paracetamol has very weak peripheral anti-inflammatory activity because it does not significantly inhibit cyclooxygenase enzymes in peripheral tissues. Evidence suggests that paracetamol acts mainly on central COX enzymes, including a possible variant known as COX-3.