Mitogen-activated protein kinases (MAPKs) play a critical role in inflammation. Although activation of MAPK in inflammatory cells has been studied extensively, much less is known about the inactivation of these kinases. MAPK phosphatase 5 (MKP5) is a member of the dual-specificity phosphatase family that dephosphorylates activated MAPKs. Here we report that MKP5 protects sepsis-induced acute lung injury. Mice lacking MKP5 displayed severe lung tissue damage following LPS challenge, characterized with increased neutrophil infiltration and edema compared with wild-type (WT) controls. In response to LPS, MKP5-deficient macrophages produced significantly more inflammatory factors including inflammatory cytokines, nitric oxide, and superoxide. Phosphorylation of p38 MAPK, JNK, and ERK were enhanced in MKP5-deficient macrophages upon LPS stimulation. Adoptive transfer of MKP5-deficient macrophages led to more severe lung inflammation than transfer of WT macrophages, suggesting that MKP5-deficient macrophages directly contribute to acute lung injury. Taken together, these results suggest that MKP5 is crucial to homeostatic regulation of MAPK activation in inflammatory responses.