TLR-induced innate immunity and inflammation are mediated by signaling cascades leading to activation of the MAPK family of Ser/Thr protein kinases, including p38 MAPK, which controls cytokine release during innate and adoptive immune responses. Failure to terminate such inflammatory reactions may lead to detrimental systemic effects, including septic shock and autoimmunity. In this study, we provide genetic evidence of a critical and nonredundant role of MAPK phosphatase (MKP)-1 in the negative control of MAPK-regulated inflammatory reactions in vivo. MKP-1−/− mice are hyperresponsive to low-dose LPS-induced toxicity and exhibit significantly increased serum TNF-α, IL-6, IL-12, MCP-1, IFN-γ, and IL-10 levels after systemic administration of LPS. Furthermore, absence of MKP-1 increases systemic levels of proinflammatory cytokines and exacerbates disease development in a mouse model of rheumatoid arthritis. When activated through TLR2, TLR3, TLR4, TLR5, and TLR9, bone marrow-derived MKP-1−/− macrophages exhibit increased cytokine production and elevated expression of the differentiation markers B7. 2 (CD86) and CD40. MKP-1-deficient macrophages also show enhanced constitutive and TLR-induced activation of p38 MAPK. Based on these findings, we propose that MKP-1 is an essential component of the intracellular homeostasis that controls the threshold and magnitude of p38 MAPK activation in macrophages, and inflammatory conditions accentuate the significance of this regulatory function.