Current thinking emphasizes the primacy of CD14 in facilitating recognition of microbes by certain TLRs to initiate pro-inflammatory signaling events and the importance of p38-MAPK in augmenting such responses. Herein, this paradigm is challenged by demonstrating that recognition of live Borrelia burgdorferi not only triggers an inflammatory response in the absence of CD14, but one that is, in part, a consequence of altered PI3K/AKT/p38-MAPK signaling and impaired negative regulation of TLR2. CD14 deficiency results in increased localization of PI3K to lipid rafts, hyperphosphorylation of AKT, and reduced activation of p38. Such aberrant signaling leads to decreased negative regulation by SOCS1, SOCS3, and CIS, thereby compromising the induction of tolerance in macrophages and engendering more severe and persistent inflammatory responses to B. burgdorferi. Importantly, these altered signaling events and the higher cytokine production observed can be mimicked through shRNA and pharmacological inhibition of p38 activity in CD14-expressing macrophages. Perturbation of this CD14/p38-MAPK-dependent immune regulation may underlie development of infectious chronic inflammatory syndromes.