Patients with cutaneous T cell lymphoma (CTCL) experience high morbidity and mortality due to S. aureus skin infections and sepsis, but the causative immune defect is unclear. We previously identified high levels of LAIR2, a decoy protein for the inhibitory receptor LAIR1, in advanced CTCL. Mice do not have a LAIR2 homolog, so we used Lair1 knock-out (KO) mice to model LAIR2 overexpression. In a model of subcutaneous S. aureus skin infection, Lair1 KO mice had significantly larger abscesses and areas of dermonecrosis compared to WT. Lair1 KO exhibited a pattern of increased inflammatory responses in infection and sterile immune stimulation, including increased production of proinflammatory cytokines and myeloid chemokines, neutrophil ROS, and collagen/ECM remodeling pathways. Notably, Lair1 KO infected skin had a similar bacterial burden and neutrophils and monocytes had equivalent S. aureus phagocytosis compared to WT. These findings support a model in which lack of LAIR1 signaling causes an excessive inflammatory response that does not improve infection control. CTCL skin lesions harbored similar patterns of increased expression in cytokine and collagen/ECM remodeling pathways, suggesting that high levels of LAIR2 in CTCL recapitulates Lair1 KO, causing inflammatory tissue damage and compromising host defense against S. aureus infection.