MD-2 is an association molecule of Toll-like receptor 4 and is indispensable for the recognition of lipopolysaccharide. Here we report the identification of mRNA for an alternatively spliced form of MD-2, named MD-2B, which lacks the first 54 bases of exon 3. When overexpressed with MD-2, MD-2B competitively suppressed NF-kappaB activity induced by LPS. Regardless of the truncation, however, MD-2B still bound to TLR4 as efficiently as MD-2. Flow cytometric analyses revealed that MD-2B inhibited TLR4 from being expressed on the cell surface. Our data indicate that MD-2B may compete with MD-2 for binding to TLR4 and decrease the number of TLR4/MD-2 complexes on the cell surface, resulting in the inhibition of LPS signaling.