TLR2 associates with TLR1 and recognizes microbial lipoproteins. Pam3CSK4, a triacylated lipoprotein, is anchored to the extracellular domain of TLR1 and TLR2 and induces pro-inflammatory signals. Here we show that C4b binding protein (C4BP), which is a complement pathway inhibitor, is a TLR2-associated molecule. Immunoprecipitation assay using anti-TLR2 mAb shows that C4BP binds to TLR2. In C4BP-deficient mice, Pam3CSK4-induced IL-6 levels were increased compared with wild type mice. In C4BP-expressing cells, Pam3CSK4-induced IL-8 production was reduced depending on the C4BP expression levels. These results reveal the important role of C4BP in negative regulation of TLR1/2-dependent pro-inflammatory cytokine production. Furthermore, using a fluorescent conjugated Pam3CSK4, we show that C4BP blocks the binding of Pam3CSK4 to TLR1/2. Finally, we show that exogenous C4BP also inhibits Pam3CSK4-induced signaling leading to IL-8 production. Our results indicate C4BP binding to TLR2 and consequent neutralization of its activity otherwise inducing pro-inflammatory cytokine production. C4BP is a negative regulator of TLR1/2 activity.