Inflammation, oxidative stress, and protease-antiprotease imbalance have been suggested to be a pathogenic triad in chronic obstructive pulmonary disease (COPD). However, it is not clear how proteases interact with components of inflammatory pathways. Therefore, this study aimed to evaluate the effect of neutrophil elastase (NE) on lipopolysaccharide (LPS)-induced interleukin 8 (IL-8) production and determine the molecular mechanism in human bronchial epithelial cells (HBECs). Immortalized bronchial epithelial cells and primary HBECs were used to investigate the impact of NE on LPS-induced IL-8 production. The molecular mechanism by which NE modulated LPS-induced IL-8 production was confirmed in elastase-treated C57BL/6 mice and primary HBECs obtained from COPD patients and healthy controls. The results showed that NE treatment synergistically augmented LPS-induced IL-8 production in both immortalized bronchial epithelial cells and primary HBECs. NE partially degraded peroxisome proliferator-activated receptor gamma (PPARγ), which is known to regulate IL-8 production in the nucleus. Treatment with a PPARγ agonist and overexpression of PPARγ reversed the NE-induced synergistic increase in LPS-induced IL-8 production. Moreover, PPARγ levels were lower in lung homogenates and lung epithelial cells from elastase-treated mice than in those from saline-treated mice. In accordance with the findings in mice, PPARγ levels were lower in primary HBECs from COPD patients than in those from healthy never-smokers or healthy smokers. In conclusion, a vicious cycle of mutual augmentation of protease activity and inflammation resulting from PPARγ degradation plays a role in the pathogenesis of COPD.