Anemia of inflammation (AI) is the second most prevalent anemia after iron deficiency anemia and results in persistent low blood erythrocytes and hemoglobin, fatigue, weakness, and early death. Anemia of inflammation is common in people with chronic inflammation, chronic infections, or sepsis. Although several studies have reported the effect of inflammation on stress erythropoiesis and iron homeostasis, the mechanisms by which inflammation suppresses erythropoiesis in the bone marrow (BM), where differentiation and maturation of erythroid cells from hematopoietic stem cells (HSCs) occurs, have not been extensively studied. Here we show that in a mouse model of acute sepsis, bacterial lipopolysaccharides (LPS) suppress medullary erythroblastic islands (EBIs) and erythropoiesis in a TLR-4- and MyD88-dependent manner with concomitant mobilization of HSCs. LPS suppressive effect on erythropoiesis is indirect as erythroid progenitors and erythroblasts do not express TLR-4 whereas EBI macrophages do. Using cytokine receptor gene knock-out mice LPS-induced mobilization of HSCs is G-CSF-dependent whereas LPS-induced suppression of medullary erythropoiesis does not require G- CSF-, IL- 1-, or TNF-mediated signaling. Therefore suppression of medullary erythropoiesis and mobilization of HSCs in response to LPS are mechanistically distinct. Our findings also suggest that EBI macrophages in the BM may sense innate immune stimuli in response to acute inflammation or infections to rapidly convert to a pro-inflammatory function at the expense of their erythropoietic function.