Naturally occurring cationic antimicrobial peptides (AMPs) mostly adopt α-helical structures in bacterial membrane mimetic environments. To explore the design of novel β-sheet AMPs, we identified two short cationic amphipathic β-strand segments from the crystal structure of the innate immune protein, MyD88. Interestingly, of these, the 10-residue arginine-valine-rich synthetic MyD88-segment, KRCRRMVVVV (M3), exhibited β-sheet structure when bound to the outer membrane Gram-negative bacterial component, LPS. Isothermal titration calorimetric data showed that M3 bound to LPS with high affinity, and the interaction was hydrophobic in nature. Supporting these observations, computational studies indicated strong interactions of multiple and consecutive valine residues of M3 with the acyl chain of LPS. Moreover, M3 adopted nanosheet and nanofibrillar structure in 25% acetonitrile/water and isopropanol, respectively. M3 showed substantial antibacterial activities against both Gram-positive and Gram-negative bacteria which it appreciably retained in the presence of human serum and physiological salts. M3 was non-hemolytic against human red blood cells and non-cytotoxic to 3T3 cells up to 200 μM and to mice in vivo at a dose of 40 mg/kg. Furthermore, M3 neutralized LPS-induced pro-inflammatory responses in THP-1 cells and rat bone marrow-derived macrophages. Consequently, M3 attenuated LPS-mediated lung inflammation in mice and rescued them (80% survival at 10 mg/kg dose) against a lethal dose of LPS. The results demonstrate the identification of a 10-mer LPS-interacting, β-sheet peptide from MyD88 with the ability to form nanostructures and in vivo activity against LPS challenge in mice. The identified M3-template provides scope for designing novel bioactive peptides with β-sheet structures and self-assembling properties.