Lower respiratory tract bacterial infections are characterized by neutrophilic inflammation in the airways. The carcinoembryonic antigen-related cell adhesion molecule (CEACAM) 8 is expressed in and released by human granulocytes. Our study demonstrates that human granulocytes release CEACAM8 in response to bacterial DNA in a TLR9-dependent manner. Individuals with a high percentage of bronchial lavage fluid (BALF) granulocytes were more likely to have detectable levels of released CEACAM8 in the BALF than those with a normal granulocyte count. Soluble, recombinant CEACAM8-Fc binds to CEACAM1 expressed on human airway epithelium. Application of CEACAM8-Fc to CEACAM1-positive human pulmonary epithelial cells resulted in reduced TLR2-dependent inflammatory responses. These inhibitory effects were accompanied by tyrosine phosphorylation of the immunoreceptor tyrosine-based inhibitory motif (ITIM) of CEACAM1 and by recruitment of the phosphatase SHP-1, which could negatively regulate Toll-like receptor 2-dependent activation of the phosphatidylinositol 3-OH kinase-Akt kinase pathway. Our results suggest a new mechanism by which granulocytes reduce pro-inflammatory immune responses in human airways via secretion of CEACAM8 in neutrophil-driven bacterial infections.