Annexin-1 (ANXA1) is a mediator of the anti-inflammatory actions of endogenous and exogenous glucocorticoids (GC). The mechanism of ANXA1 effects on cytokine production in macrophages is unknown and is here investigated in vivo and in vitro. In response to LPS administration, ANXA1(-/-) mice exhibited significantly increased serum IL-6 and TNF compared with wild-type (WT) controls. Similarly, LPS-induced IL-6 and TNF were significantly greater in ANXA1(-/-) than in WT peritoneal macrophages in vitro. In addition, deficiency of ANXA1 was associated with impairment of the inhibitory effects of dexamethasone (DEX) on LPS-induced IL-6 and TNF in macrophages. Increased LPS-induced cytokine expression in the absence of ANXA1 was accompanied by significantly increased LPS-induced activation of ERK and JNK MAPK and was abrogated by inhibition of either of these pathways. No differences in GC effects on MAPK or MAPK phosphatase 1 were observed in ANXA1(-/-) cells. In contrast, GC-induced expression of the regulatory protein GILZ was significantly reduced in ANXA1(-/-) cells by silencing of ANXA1 in WT cells and in macrophages of ANXA1(-/-) mice in vivo. GC-induced GILZ expression and GC inhibition of NF-kappaB activation were restored by expression of ANXA1 in ANXA1(-/-) cells, and GILZ overexpression in ANXA1(-/-) macrophages reduced ERK MAPK phosphorylation and restored sensitivity of cytokine expression and NF-kappaB activation to GC. These data confirm ANXA1 as a key inhibitor of macrophage cytokine expression and identify GILZ as a previously unrecognized mechanism of the anti-inflammatory effects of ANXA1.