CD44 is a transmembrane adhesion molecule and hemopoietic CD44 has an essential role in hyaluronan clearance and resolution of noninfectious lung injury. In this study, we examined the role of CD44 in acute pulmonary inflammation and in the regulation of LPS-TLR signaling. Following intratracheally LPS treatment, CD44(-/-) mice demonstrated an exaggerated inflammatory response characterized by increased inflammatory cell recruitment, elevated chemokine expression in bronchoalveolar lavage fluid, and a marked increase in NF-kappaB DNA-binding activity in lung tissue in vivo and in macrophages in vitro. Furthermore, CD44(-/-) mice were more susceptible to LPS-induced shock. Reconstitution of hemopoietic CD44 reversed the inflammatory phenotype. We further found that the induction of the negative regulators of TLR signaling IL-1R-associated kinase-M, Toll-interacting protein, and A20 by intratracheal LPS in vivo and in macrophages in vitro was significantly reduced in CD44(-/-) mice. Collectively, these data suggest CD44 plays a previously unrecognized role in preventing exaggerated inflammatory responses to LPS by promoting the expression of negative regulators of TLR-4 signaling.