Dysregulation of the innate immune response underlies numerous pathological conditions. The Toll-like Receptor 4 (TLR4) is the prototypical sensor of infection or injury that orchestrates the innate response via sequential activation of both cell-surface and endocytic signaling pathways that trigger distinct downstream consequences. CD14 binds and delivers LPS to TLR4 and has been identified as a positive regulator of TLR4 signal transduction. It is logical that negative regulators of this process also exist to maintain the critical balance required for fighting infection, healing damaged tissue and resolving inflammation. We showed that CD13 negatively modulates receptor-mediated Ag uptake in dendritic cells to control T-cell activation in adaptive immunity. Here we report that myeloid CD13 governs internalization of TLR4 and subsequent innate signaling cascades, activating IRF-3 independently of CD14. CD13 is co-internalized with TLR4, CD14 and dynamin into Rab5+ early endosomes upon LPS treatment. Importantly, in response to TLR4 ligands HMGB1 and LPS, pIRF-3 activation and transcription of its target genes is enhanced in CD13KO DCs while TLR4 surface signaling remains unaffected, resulting in a skewed inflammatory response. This finding is physiologically relevant as ischemic injury in vivo provoked identical TLR4 responses. Finally, CD13KO mice showed significantly enhanced IFNβ-mediated signal transduction via JAK-STAT, escalating iNOS transcription levels and promoting accumulation of oxidative stress mediators and tissue injury. Mechanistically, inflammatory activation of macrophages upregulates CD13 expression and CD13 and TLR4 co-immunoprecipitate. Therefore, CD13 negatively regulates TLR4 signaling, thereby balancing the innate response by maintaining the inflammatory equilibrium critical to innate immune regulation.