Acute lung injury (ALI) and acute respiratory distress syndrome (ARDS) are characterized by an excessive inflammatory response within the lungs and severely impaired gas exchange resulting from alveolar-capillary barrier disruption and pulmonary edema. The costimulatory protein B7H3 functions as both a costimulator and coinhibitor to regulate the adaptive and innate immune response, thus participating in the development of microbial sepsis and pneumococcal meningitis. However, it is unclear whether B7H3 exerts a beneficial or detrimental role during ALI. In the present study we examined the impact of B7H3 on pulmonary inflammatory response, polymorphonuclear neutrophil (PMN) influx, and lung tissue damage in a murine model of lipopolysaccharide (LPS)-induced direct ALI. Treatment with B7H3 protected mice against LPS-induced ALI, with significantly attenuated pulmonary PMN infiltration, decreased lung myeloperoxidase (MPO) activity, reduced bronchoalveolar lavage fluid (BALF) protein content, and ameliorated lung pathological changes. In addition, B7H3 significantly diminished LPS-stimulated PMN chemoattractant CXCL2 production by inhibiting NF-κB p65 phosphorylation, and substantially attenuated LPS-induced PMN chemotaxis and transendothelial migration by down-regulating CXCR2 and Mac-1 expression. These results demonstrate that B7H3 substantially ameliorates LPS-induced ALI and this protection afforded by B7H3 is predominantly associated with its inhibitory effect on pulmonary PMN migration and infiltration.