Nitric oxide (NO) production by inducible NO synthase (iNOS) during inflammation is an essential element of antimicrobial immunity but can also contribute to host-induced tissue damage. Under conditions of bacterial sepsis, large amounts of NO are produced, causing hypotension, a critical pathological feature of septic shock. In sepsis caused by gram-positive organisms, the bacterial factors contributing to host NO production are poorly characterized. We show that a soluble toxin of Streptococcus pneumoniae, pneumolysin (Pln), is a key component initiating NO production from macrophages. In contrast to wild-type bacteria, a mutant of S. pneumoniae lacking Pln failed to elicit NO production from murine macrophages. Purified recombinant Pln induced NO production at low concentrations and independently of exogenous gamma interferon (IFN-gamma) priming of RAW 264.7 macrophages. However, IFN-gamma was essential for Pln-induced NO production, since primary macrophages from mice lacking the IFN-gamma receptor or interferon regulatory factor 1, a transcription factor essential for iNOS expression, failed to produce NO when stimulated with Pln. In addition, Pln acts as an agonist of tumor necrosis factor alpha and interleukin 6 production in macrophages. The properties of Pln, previously identified as a pore-forming hemolysin, also include a role as a general inflammatory agonist.