Pathogenic inflammation and immune suppression are the cardinal features that underlie the pathogenesis of severe systemic inflammatory syndrome and sepsis. Neutrophil exhaustion may play a key role during the establishment of pathogenic inflammation and immune suppression through elevated expression of inflammatory adhesion molecules such as ICAM1 and CD11b as well as immune-suppressors such as PD-L1. However, the mechanism of neutrophil exhaustion is not well understood. We demonstrated that murine primary neutrophils cultured in vitro with the prolonged lipopolysaccharides (LPS) stimulation can effectively develop an exhaustive phenotype resembling human septic neutrophils with elevated expression of ICAM1, CD11b, PD-L1 as well as enhanced swarming and aggregation. Mechanistically, we observed that TICAM2 is involved in the generation of neutrophil exhaustion, as TICAM2 deficient neutrophils have the decreased expression of ICAM1, CD11b, PD-L1, and the reduced aggregation following the prolonged LPS challenge as compared to wild type (WT) neutrophils. LPS drives neutrophil exhaustion through TICAM2 mediated activation of Src family kinases (SFK) and STAT1, as the application of SFK inhibitor Dasatinib blocks neutrophil exhaustion triggered by the prolonged LPS challenge. Functionally, TICAM2 deficient mice were protected from developing severe systemic inflammation and multi-organ injury following the chemical-induced mucosal damage. Together, our data defined a key role of TICAM2 in facilitating neutrophil exhaustion and that targeting TICAM2 may be a potential approach to treating the severe systemic inflammation.