Uridine diphosphate (UDP) is a proinflammatory nucleotide implicated in inflammatory bowel disease. Intestinal alkaline phosphatase (IAP) is a gut mucosal defense factor capable of inhibiting intestinal inflammation. We used the malachite green assay to show that IAP dephosphorylates UDP. To study the anti-inflammatory effect of IAP, UDP or other proinflammatory ligands (LPS, flagellin, Pam3Cys, or TNF-α) in the presence or absence of IAP were applied to cell cultures, and IL-8 was measured. UDP caused dose-dependent increase in IL-8 release by immune cells and two gut epithelial cell lines, and IAP treatment abrogated IL-8 release. Costimulation with UDP and other inflammatory ligands resulted in a synergistic increase in IL-8 release, which was prevented by IAP treatment. In vivo, UDP in the presence or absence of IAP was instilled into a small intestinal loop model in wild-type and IAP-knockout mice. Luminal contents were applied to cell culture, and cytokine levels were measured in culture supernatant and intestinal tissue. UDP-treated luminal contents induced more inflammation on target cells, with a greater inflammatory response to contents from IAP-KO mice treated with UDP than from WT mice. Additionally, UDP treatment increased TNF-α levels in intestinal tissue of IAP-KO mice, and cotreatment with IAP reduced inflammation to control levels. Taken together, these studies show that IAP prevents inflammation caused by UDP alone and in combination with other ligands, and the anti-inflammatory effect of IAP against UDP persists in mouse small intestine. The benefits of IAP in intestinal disease may be partly due to inhibition of the proinflammatory activity of UDP.