Lumican is an extracellular matrix protein modified as a proteoglycan in some tissues. The core protein with leucine-rich repeats, characteristic of the leucine-rich-repeat superfamily, binds collagen fibrils and regulates its structure. In addition, we believe that lumican sequestered in the pericellular matrix interacts with cell surface proteins for specific cellular functions. Here we show that bacterial lipopolysaccharide sensing by the Toll-like receptor 4 signaling pathway and innate immune response is regulated by lumican. Primary cultures of lumican-deficient (Lum(-/-)) macrophages show impaired innate immune response to lipopolysaccharides with lower induction of tumor necrosis factor alpha (TNFalpha) and interleukin-6. Macrophage response to other pathogen-associated molecular patterns is not adversely affected by lumican deficiency, suggesting a specific role for the lumican core protein in the Toll-like receptor 4 pathway. An exogenous recombinant lumican core protein increases lipopolysaccharide-mediated TNFalpha induction and partially rescues innate immune response in Lum(-/-) macrophages. We further show that the core protein binds lipopolysaccharide. Immunoprecipitation of lumican from peritoneal lavage co-precipitates CD14, a cell surface lipopolysaccharide-binding protein that is involved in its presentation to Toll-like receptor 4. The Lum(-/-) mice are hypo-responsive to lipopolysaccharide-induced septic shock, with poor induction of pro-inflammatory cytokines, TNFalpha, and interleukins 1beta and 6 in the serum. Taken together, the data indicates a novel role for lumican in the presentation of bacterial lipopolysaccharide to CD14 and host response to this bacterial endotoxin.