The inability of epithelial cells from the cornea and other tissues to respond to LPS is reportedly due to low expression of the TLR4 co-receptor MD-2. We generated MD-2 ؊/؊ bone marrow chimeras, and showed that MD-2 expression on nonmyeloid cells was sufficient to mediate LPS-induced corneal inflammation. As IFN-␥ is produced during Pseudomonas aeruginosa corneal infection, we examined the role of this cytokine on MD-2 expression by primary human corneal epithelial ( MD-2 is a ϳ25-kDa LPS-binding protein that forms a heterodimer with TLR4 2 (1-3). The crystal structure of the TLR4-MD-2 complex shows that when five of the six acyl chains of lipid A bind MD-2 and one chain binds to TLR4, it undergoes a structural change that facilitates dimerization and cell activation (4). The canonical signaling pathway involves recruitment of MyD88 and Mal/TIRAP adaptor molecules to the TIR domain of TLR4, which initiates the canonical signaling pathway leading to NFB translocation to the nucleus and production of proinflammatory and chemotactic cytokines (5, 6). The TLR4-MD-2 complex is also internalized (7), leading to recruitment of adaptor molecules TRIF-related adaptor molecule (TRAM) and TRIF and to nuclear translocation of NFB and IRF3 and production of type I IFNs (5, 6). In macrophages and dendritic cells, MD-2 is expressed constitutively, thereby mediating LPS responsiveness (1,8). In contrast, epithelial cells do not constitutively express MD-2 and do not respond to LPS unless MD-2 is provided exogenously (9 -11). MD-2 expression in intestinal, airway, oral, and conjunctival epithelial cells is induced by , although neither the source of IFN-␥ or the mechanism of induction has been fully elucidated.In the current study we examine the role of MD-2 and expression of IFN-␥ in the context of corneal infection and inflammation and determine the molecular basis for LPS hyporesponsiveness and MD-2 expression in the presence of IFN-␥ in human corneal epithelial cells.