The lumenal surface of the colonic epithelium is continually exposed to Gram-negative commensal bacteria and LPS. Recognition of LPS by Toll-like receptor (TLR)-4 results in proinflammatory gene expression in diverse cell types. Normally, however, commensal bacteria and their components do not elicit an inflammatory response from intestinal epithelial cells (IEC). The aim of this study is to understand the molecular mechanisms by which IEC limit chronic activation in the presence of LPS. Three IEC lines (Caco-2, T84, HT-29) were tested for their ability to activate an NF-kappaB reporter gene in response to purified, protein-free LPS. No IEC line responded to LPS, whereas human dermal microvessel endothelial cells (HMEC) did respond to LPS. IEC responded vigorously to IL-1beta in this assay, demonstrating that the IL-1 receptor signaling pathway shared by TLRs was intact. To determine the reason for LPS hyporesponsiveness in IEC, we examined the expression of TLR4 and MD-2, a critical coreceptor for TLR4 signaling. IEC expressed low levels of TLR4 compared with HMEC and none expressed MD-2. To determine whether the low level of TLR4 expression or absent MD-2 was responsible for the LPS signaling defect in IEC, the TLR4 or MD-2 gene was transiently expressed in IEC lines. Transient transfection of either gene individually was not sufficient to restore LPS signaling, but cotransfection of TLR4 and MD-2 in IEC led to synergistic activation of NF-kappaB and IL-8 reporter genes in response to LPS. We conclude that IEC limit dysregulated LPS signaling by down-regulating expression of MD-2 and TLR4. The remainder of the intracellular LPS signaling pathway is functionally intact.