Phagocytosis and oxidative burst are two major effector arms of innate immunity. Although it is known that both are activated by Toll-like receptors (TLRs) and Rac GTPases, how their strengths are controlled in quiescent and TLR-activated cells is not clear. We report here that TIPE2 (TNFAIP8L2) serves as a negative regulator of innate immunity by linking TLRs to Rac. TLRs control the expression levels of TIPE2, which in turn dictates the strengths of phagocytosis and oxidative burst by binding to and blocking Rac GTPases. Consequently, TIPE2 knockout cells have enhanced phagocytic and bactericidal activities and TIPE2 knockout mice are resistant to bacterial infection. Thus, TIPE2 sets the strengths of phagocytosis and oxidative burst and may be targeted to effectively control infections.