Although gram-positive infections account for the majority of cases of sepsis, the molecular mechanisms underlying their effects remains poorly understood. We investigated how cell wall components of gram-positive bacteria contribute to the development of sepsis. Experimental observations derived from cultured primary macrophages and the cell line indicate that gram-positive bacterial endotoxins induce hypoxia-inducible factor 1α (HIF-1α) mRNA and protein expression. Inoculation of live or heat-inactivated gram-positive bacteria with macrophages induced HIF-1 transcriptional activity in macrophages. Concordant with these results, myeloid deficiency of HIF-1α attenuated gram-positive bacterial endotoxin-induced cellular motility and proinflammatory gene expression in macrophages. Conversely, gram-positive bacteria and their endotoxins reduced expression of the myeloid anti-inflammatory transcription factor Krüppel-like transcription factor 2 (KLF2). Sustained expression of KLF2 reduced and deficiency of KLF2 enhanced gram-positive endotoxins induced HIF-1α mRNA and protein expression in macrophages. More importantly, KLF2 attenuated gram-positive endotoxins induced cellular motility and proinflammatory gene expression in myeloid cells. Consistent with these results, mice deficient in myeloid HIF-1α were protected from gram-positive endotoxin-induced sepsis mortality and clinical symptomatology. By contrast, myeloid KLF2-deficient mice were susceptible to gram-positive sepsis induced mortality and clinical symptoms. Collectively, these observations identify HIF-1α and KLF2 as critical regulators of gram-positive endotoxin-mediated sepsis.