Arginase has been reported to reduce nitric oxide bioavailability in cardiovascular disease. However, its specific role in retinopathy has not been studied. In this study, we assessed the role of arginase in a mouse model of endotoxin-induced uveitis induced by lipopolysaccharide (LPS) treatment. Measurement of arginase expression and activity in the retina revealed a significant increase in arginase activity that was associated with increases in both mRNA and protein levels of arginase (Arg)1 but not Arg2. Immunofluorescence and flow cytometry confirmed this increase in Arg1, which was localized to glia and microglia. Arg1 expression and activity were also increased in cultured Muller cells and microglia treated with LPS. To test whether arginase has a role in the development of retinal inflammation, experiments were performed in mice deficient in one copy of the Arg1 gene and both copies of the Arg2 gene or in mice treated with a selective arginase inhibitor. These studies showed that LPS-induced increases in inflammatory protein production, leukostasis, retinal damage, signs of anterior uveitis, and uncoupling of nitric oxide synthase were blocked by either knockdown or inhibition of arginase. Furthermore, the LPS-induced increase in Arg1 expression was abrogated by blocking NADPH oxidase. In conclusion, these studies suggest that LPS-induced retinal inflammation in endotoxin-induced uveitis is mediated by NADPH oxidase-dependent increases in arginase activity.