The bactericidal/permeability-increasing protein (BPI), is a ca. 55 kDa cytotoxic cationic protein of polymorphonuclear leukocytes (PMN) that is present principally in the azurophilic granules. BPI is toxic only toward Gram-negative bacteria. This target specificity is attributable to the strong attraction of BPI for the lipopolysaccharides (LPS) in the bacterial envelope. BPI also binds with high affinity (apparent Kd 2-5 nM) to a broad range of LPS species and potently inhibits the biologic activities of LPS in vitro. A proteolytically prepared or recombinant ca 25 kDa N-terminal fragment of BPI carries all the antibacterial activities of holo-BPI and is more potent than the holo-protein against more resistant bacteria with S-form LPS in their envelope. The fragment is as active as holo-BPI as an LPS-neutralizing agent in vitro and more potently inhibits cytokine induction by S-form Escherichia coli in whole blood ex vivo. Recombinant forms of both proteins protect animals against the lethal effects of administered LPS.