Engagement of Toll-like receptors (TLRs) on macrophages leads to activation of the mitogen-activated protein kinases (MAPKs), which contribute to innate immune responses. MAPK activity is regulated negatively by MAPK phosphatases (MKPs). MKP-1, the founding member of this family of dual-specificity phosphatases, has been implicated in regulating lipopolysaccharide (LPS) responses, but its role in TLR-mediated immune responses in vivo has not been defined. Here, we show that mice deficient in MKP-1 were highly susceptible to endotoxic shock in vivo, associated with enhanced production of proinflammatory cytokines TNF-alpha and IL-6 and an anti-inflammatory cytokine, IL-10. We further examined the regulation and function of MKP-1 in macrophages, a major cell type involved in endotoxic shock. MKP-1 was transiently induced by TLR stimulation through pathways mediated by both myeloid differentiation factor 88 (MyD88) and TIR domain-containing adaptor inducing IFN-beta (TRIF). MKP-1 deficiency led to sustained activation of p38 MAPK and c-Jun N-terminal kinase (JNK) in LPS-treated macrophages. In response to TLR signals, MKP-1-deficient macrophages produced 5- to 10-fold higher IL-10, which could be blocked by a p38 MAPK inhibitor. Thus, p38 MAPK plays a critical role in mediating IL-10 synthesis in TLR signaling. TNF-alpha was found to be more abundant in MKP-1-deficient macrophages within 2 hours of TLR stimulation, but its production was rapidly down-regulated by IL-10. Our studies demonstrate that MKP-1 attenuates the activities of p38 MAPK and JNK to regulate both pro- and anti-inflammatory cytokines in TLR signaling. These results highlight the complex mechanisms by which the MAPKs regulate innate immunity.