Tight junctions between intestinal epithelial cells mediate the permeability of the intestinal barrier, and loss of intestinal barrier function mediated by TNF signaling is associated with the inflammatory pathophysiology observed in Crohn's disease and celiac disease. Thus, factors that modulate intestinal epithelial cell response to TNF may be critical for the maintenance of barrier function. TNF alpha-induced protein 3 (TNFAIP3) is a cytosolic protein that acts in a negative feedback loop to regulate cell signaling induced by Toll-like receptor ligands and TNF, suggesting that TNFAIP3 may play a role in regulating the intestinal barrier. To investigate the specific role of TNFAIP3 in intestinal barrier function we assessed barrier permeability in TNFAIP3(-/-) mice and LPS-treated villin-TNFAIP3 transgenic mice. TNFAIP3(-/-) mice had greater intestinal permeability compared to wild-type littermates, while villin-TNFAIP3 transgenic mice were protected from increases in permeability seen within LPS-treated wild-type littermates, indicating that barrier permeability is controlled by TNFAIP3. In cultured human intestinal epithelial cell lines, TNFAIP3 expression regulated both TNF-induced and myosin light chain kinase-regulated tight junction dynamics but did not affect myosin light chain kinase activity. Immunohistochemistry of mouse intestine revealed that TNFAIP3 expression inhibits LPS-induced loss of the tight junction protein occludin from the apical border of the intestinal epithelium. We also found that TNFAIP3 deubiquitinates polyubiquitinated occludin. These in vivo and in vitro studies support the role of TNFAIP3 in promoting intestinal epithelial barrier integrity and demonstrate its novel ability to maintain intestinal homeostasis through tight junction protein regulation.