Tumor necrosis factor (TNF) is a powerful activator of the immune system and a well-validated target for treatment of autoimmune diseases. Injection of TNF induces systemic lethal inflammation characterized by hypothermia, induction of multiple cytokines, and extensive damage to multiple organs. Previously, we reported that TNF-induced lethal inflammation is strictly TNFR1(P55)-dependent. We also uncovered a crucial role for P55 expression levels in intestinal epithelial cells (IECs), in which P55+/+ expression is sufficient to sensitize to TNF lethality in an otherwise fully protected P55+/- background. Here, we investigated the molecular mechanism that drives TNF toxicity in IECs. Unexpectedly, we found that the degree of TNF-induced enterocyte damage and apoptosis in IECs is equally strong in TNF-sensitive P55+/+ mice and TNF-resistant P55+/- mice. Our results suggest that P55+/+-induced signaling causes goblet and Paneth cell dysfunction, leading to severe epithelial barrier dysfunction. As a result, intestinal permeability and systemic bacterial spread are induced, causing lethal systemic inflammation. In conclusion, we identified P55-induced goblet and Paneth cell dysfunction as a crucial mechanism for TNF-induced systemic and lethal inflammation.