Animals that cannot sense endotoxin may die if they are infected by Gram-negative bacteria. Animals that sense endotoxin and respond too vigorously may also die, victims of their own inflammatory reactions. The outcome of Gram-negative bacterial infection is thus determined not only by an individual's ability to sense endotoxin and respond to its presence, but also by numerous phenomena that inactivate endotoxin and/or prevent harmful reactions to it. Endotoxin sensing requires the MD-2/TLR4 recognition complex and occurs principally in local tissues and the liver. This review highlights the known detoxification mechanisms, which include: (i) proteins that facilitate LPS sequestration by plasma lipoproteins, prevent interactions between the bioactive lipid A moiety and MD-2/TLR4, or promote cellular uptake via non-signaling pathway(s); (ii) enzymes that deacylate or dephosphorylate lipid A; (iii) mechanisms that remove LPS and Gram-negative bacteria from the bloodstream; and (iv) neuroendocrine adaptations that modulate LPS-induced mediator production or neutralize pro-inflammatory molecules in the circulation. In general, the mechanisms for sensing and detoxifying endotoxin seem to be compartmentalized (local versus systemic), dynamic, and variable between individuals. They may have evolved to confine infection and inflammation to extravascular sites of infection while preventing harmful systemic reactions. Integration of endotoxin sensing and detoxification is essential for successful host defense.