Severe respiratory syncytial virus (RSV)-induced bronchiolitis has been associated with a mixed "Th1" and "Th2" cytokine storm. We hypothesized that differentiation of "alternatively activated" macrophages (AA-M phi) would mediate the resolution of RSV-induced lung injury. RSV induced interleukin (IL)-4 and IL-13 by murine lung and peritoneal macrophages, IL-4R alpha/STAT6-dependent AA-M phi differentiation, and significantly enhanced inflammation in the lungs of IL-4R alpha(-/-) mice. Adoptive transfer of wildtype macrophages to IL-4R alpha(-/-) mice restored RSV-inducible AA-M phi phenotype and diminished lung pathology. RSV-infected Toll-like receptor (TLR)4(-/-) and interferon (IFN)-beta(-/-) macrophages and mice also failed to express AA-M phi markers, but exhibited sustained proinflammatory cytokine production (e.g., IL-12) in vitro and in vivo and epithelial damage in vivo. TLR4 signaling is required for peroxisome proliferator-activated receptor gamma expression, a DNA-binding protein that induces AA-M phi genes, whereas IFN-beta regulates IL-4, IL-13, IL-4R alpha, and IL-10 expression in response to RSV. RSV-infected cotton rats treated with a cyclooxygenase-2 inhibitor increased expression of lung AA-M phi. These data suggest new treatment strategies for RSV that promote AA-M phi differentiation.