Lipopolysaccharide (LPS)-binding protein (LBP) is an acute phase reactant that may play a dual role in vivo, both potentiating and decreasing cell responses to bacterial LPS. Whereas low concentrations of LBP potentiate cell stimulation by transferring LPS to CD14, high LBP concentrations inhibit cell responses to LPS. One inhibitory mechanism involves the ability of LBP to neutralize LPS by transferring it to plasma lipoproteins, whereas other inhibitory mechanisms, such as the one described here, do not require exogenous lipoproteins. Here we show that LBP can inhibit monocyte responses to LPS that has already bound to membrane-bound CD14 (mCD14) on the cell surface. LBP caused rapid dissociation of LPS from mCD14 as measured by the ability of LBP to inhibit cross-linking of a radioiodinated, photoactivatable LPS derivative to mCD14. Whereas LBP removed up to 75% of the mCD14-bound LPS in 10 min, this was not accompanied by extensive release of the LPS from the cells. The cross-linking data suggest that much of the LPS that remained bound to the cells was associated with LBP. The ability of LBP to inhibit cell responses could not be explained by its effect on LPS internalization, because LBP did not significantly increase the internalization of the cell-bound LPS. In cell-free LPS cross-linking experiments, LBP inhibited the transfer of LPS from soluble CD14 to soluble MD-2. Our data support the hypothesis that LBP can inhibit cell responses to LPS by inhibiting LPS transfer from mCD14 to the Toll-like receptor 4-MD-2 signaling receptor.