Protein tyrosine phosphatases play key roles in a diverse range of cellular processes such as differentiation, cell proliferation, apoptosis, immunological signaling, and cytoskeletal function. Protein tyrosine phosphatase non-receptor type 7 (PTPN7), a member of the phosphatase family, specifically inactivates mitogen-activated protein kinases (MAPKs). Here, we report that PTPN7 acts as a regulator of pro-inflammatory TNF-α production in RAW 264.7 cells that are stimulated with lipopolysaccharide (LPS) that acts as an endotoxin and elicits strong immune responses in animals. Stimulation of RAW 264.7 cells with LPS leads to a transient decrease in the levels of PTPN7 mRNA and protein. The overexpression of PTPN7 inhibits LPS-stimulated production of TNF-α. In addition, small interfering RNA (siRNA) analysis showed that knock-down of PTPN7 in RAW 264.7 cells increased TNF-α production. PTPN7 has a negative regulatory function to extracellular signal regulated kinase 1/2 (ERK1/2) and p38 that increase LPS-induced TNF-α production in macrophages. Thus, our data presents PTPN7 as a negative regulator of TNF-α expression and the inflammatory response in macrophages.