In this paper, we show that plasma from patients with severe sepsis and septic shock but not normal plasma supports lipopolysaccharide (LPS) activation of epithelial cells expressing Toll-like receptor 4 (TLR4). Recombinant soluble myeloid differentiation protein-2 (MD-2) complemented normal plasma and allowed LPS activation of epithelial cells to levels measured with "septic" plasma, whereas soluble MD-2-depleted plasma lost its effects. The same "MD-2 activity" was found in urine from a patient with septic shock and in lung edema fluids from patients with adult respiratory distress syndrome (ARDS). Recombinant soluble MD-2 enabled LPS-dependent activation of epithelial cells bearing TLR4. LPS-binding protein (LBP) and soluble CD14 increased the sensitivity of TLR4-expressing epithelial cells to LPS but were not able to mediate LPS activation of these cells in the absence of soluble MD-2. An anti-MD-2 monoclonal antibody blocked LPS activation of TLR4-expressing cells only in the presence of septic plasma or septic urine. These results suggest that septic plasma containing soluble MD-2 leaking into the extravascular space supports LPS activation of TLR4-expressing epithelial cells. We therefore propose that soluble MD-2 is an important mediator of organ inflammation during sepsis.