Interleukin-8 is a key mediator in the pathophysiology of acute lung injury (ALI). TNF- stimulates IL-8 production in respiratory epithelial cells by activating both the NF-B and MAP kinase pathways. The precise mechanism by which these pathways are down regulated to terminate IL-8 production remains unclear. We studied the regulatory role of the serine/threonine phosphatase, PP2A, on the signaling pathways involved in IL-8 production from respiratory epithelial cells. Inhibition of PP2A using okadaic acid (OA) or gene knockdown using siRNA resulted in an augmentation of TNF- induced IL-8 production. We also found that PP2A inhibition resulted in prolonged activation of JNK, p38 and ERK resulting in both increased transcriptional activation of the IL-8 promoter and post-transcriptional stabilization of IL-8 mRNA. Because TNF- had been shown to activate ceramide accumulation and separate studies had linked ceramide with activation of PP2A, we hypothesized the pathway of TNF- inducing ceramide to activate PP2A comprised an endogenous regulatory pathway. Inhibition of the immediate sphingomyelinase-dependent pathway as well as the de novo synthesis pathway of ceramide production reduced serine/threonine phosphatase activity and augmented IL-8 production. These data suggest that ceramide plays a role in activating PP2A to terminate ongoing IL-8 production. In summary, our data suggest that in respiratory epithelium, TNF- induces ceramide accumulation resulting in subsequent activation of PP2A which targets those kinases responsible for transcriptional activation of IL-8.