LPS binding protein (LBP) and CD14 play key roles in promoting innate immunity to Gram-negative bacteria by transferring LPS to the signaling receptor complex, MD-2/Toll-like receptor 4 (TLR4). LBP and soluble CD14 (sCD14) can also inhibit responses to LPS by mechanisms that depend on their concentration and environment; during acute inflammation and infection, their concentrations increase in plasma and extravascular fluids. Whereas low concentrations of LBP enhance responses to LPS, high LBP concentrations can inhibit LPS bioactivity in vitro and in vivo. sCD14 also inhibits cell responses by diverting LPS from membrane-bound CD14 (mCD14) and by promoting LPS efflux from cell-surface mCD14 and transferring it to plasma lipoproteins. In vivo studies support the hypothesis that sCD14 has systemic anti-inflammatory effects, whereas in the tissues it may have pro-inflammatory effects that increase resistance to bacteria. Likewise, LBP increases resistance to Gram-negative bacteria by rapidly triggering pro-inflammatory responses to LPS. Thus, the dual stimulatory and inhibitory mechanisms of sCD14 and LBP may benefit the infected host by promoting inflammation in local sites, where it is needed, while at the same time preventing potentially detrimental systemic responses to LPS.