Although acute lung inflammation in response to local or systemic infection involves myeloid and non-myeloid cells, the interplay between different cell types remains poorly defined. Since NF-B is a key transcription factor for innate immunity, we investigated whether dysregulated NF-B activation in myeloid cells impacts inflammatory signaling in non-myeloid cells and generation of neutophilic lung inflammation in response to systemic endotoxemia. We generated bone marrow chimeras by fetal liver transplantation of cells deficient in IB or p50 into lethally irradiated NF-B reporter transgenic mice. No differences were apparent between bone marrow chimeras in the absence of an inflammatory stimulus; however, following intraperitoneal injection of E.coli lipopolysaccharide (LPS), IB or p50 deficient bone marrow chimeras showed increased NF-B activation in non-myeloid cells, exaggerated neutrophilic inflammation, and higher mortality compared to untransplanted reporter mice and wild type bone marrow chimeras. Primary bone marrow derived macrophages (BMDM) from IB^-/- or p50^-/- exhibited increased NF-B activation and MIP-2 production after LPS treatment compared to wild-type cells, and co-culture of BMDM with lung epithelial (A549) cells resulted in increased NF-B activation in A549 cells and excess IL-8 production by these epithelial cells. These studies indicate an important role for inhibitory members of the NF-B family acting specifically within myeloid cells to limit inflammatory responses in the lungs.