Lung infection by Gram-negative bacteria is a major cause of morbidity and mortality in humans. Lipopolysaccharide (LPS), located in the outer membrane of the Gram-negative bacterial cell wall, is a highly potent stimulus of immune and structural cells via the TLR4/MD2 complex whose function is sequentially regulated by defined subsets of adaptor proteins. Regulatory mechanisms of lung-specific defense pathways point at the crucial role of resident alveolar macrophages, alveolar epithelial cells, the TLR4 receptor pathway, and lung surfactant in shaping the innate immune response to Gram-negative bacteria and LPS. During the past decade intracellular spatiotemporal localization of TLR4 emerged as a key feature of TLR4 function. Here, we briefly review lung cell type- and compartment-specific mechanisms of LPS-induced TLR4 regulation with a focus on primary resident hematopoietic and structural cells as well as modifying microenvironmental factors involved.