The HIV-1 PI NFV has off-target effects upon host enzymes, including inhibition of the 20S proteasome, resulting in activation of PP1. HIV-1-associated monocyte/macrophage activation, in part a result of systemically elevated levels of microbial products including LPS, is associated with risk of mortality, independent of viremia or CD4 T cell loss. This study tested the hypothesis that activation of protein phosphatases by NFV would reduce activation of monocytes/macrophages through dephosphorylation of signal transduction proteins. NFV uniquely blocked LPS-induced production by human monocyte-derived macrophages of the inflammatory cytokines TNF and IL-6, as well as sCD14. Although NFV failed to modulate NF-κB, NFV treatment reduced phosphorylation of AKT and MAPKs. Inhibition of PP2 with okadaic acid blocked the anti-inflammatory effect of NFV, whereas the PP1 inhibitor calyculin A failed to counter the anti-inflammatory effects of NFV. For in vivo studies, plasma sCD14 and LPS were monitored in a cohort of 31 pediatric HIV-1 patients for over 2 years of therapy. Therapy, including NFV, reduced sCD14 levels significantly compared with IDV or RTV, independent of ΔLPS levels, VL, CD4 T cell frequency, or age. The hypothesis was supported as NFV induced activation of PP2 in macrophages, resulting in disruption of inflammatory cell signaling pathways. In vivo evidence supports that NFV may offer beneficial effects independent of antiviral activity by reducing severity of chronic innate immune activation in HIV-1 infection.