Lactoferrin (Lf) is an 80 kDa iron-binding protein of the transferrin family that is abundantly expressed in most biological fluids. It is now recognized that this glycoprotein is a key element in the mammalian immune system, playing an important role in host defence against infection and excessive inflammation. Although the mechanisms underlying Lf immunomodulatory properties have not been fully elucidated yet, evidence indicates that the capacity of this molecule to directly interact with antigen presenting cells (APCs), i.e. monocytes/macrophages and dendritic cells (DCs), may play a critical role. At the cellular level, Lf modulates important aspects of APC biology, including migration and cell activation, whereas at the molecular level it affects expression of soluble immune mediators, such as cytokines, chemokines and other effector molecules, thus contributing to the regulation of inflammation and immunity. While the iron-binding property was originally believed to be solely responsible for the plethora of host defence activities ascribed to Lf, it is now known that other mechanisms contribute to the broad spectrum of anti-infective and anti-inflammatory properties of this protein. Recent results suggest that at least some of the immunomodulatory effects of Lf rely on its capacity to form complexes with lipopolysaccharide (LPS). This review focuses on the effects of Lf on APC biology and function, highlighting known and putative mechanisms that underlie Lf immunomodulatory effects. The importance of LPS-binding capacity of Lf and LPS receptors, as well as of Lf-induced type 1 interferon (IFN) expression in some of these effects is also discussed.