LPS interacts with TLR4, which play important roles in host-against-pathogen immune responses, by binding to MD-2 and inducing an inflammatory response. In this study, to our knowledge, we found a novel function of lipoteichoic acid (LTA), a TLR2 ligand, that involves suppression of TLR4-mediated signaling independently of TLR2 under serum-free conditions. LTA inhibited NF-κB activation induced by LPS or a synthetic lipid A in a noncompetitive manner in human embryonic kidney 293 cells expressing CD14, TLR4, and MD-2. This inhibition was abrogated by addition of serum or albumin. LTAs from different bacterial sources also inhibited NF-κB activation, although LTA from Enterococcus hirae had essentially no TLR2-mediated NF-κB activation. The TLR2 ligands tripalmitoyl-Cys-Ser-Lys-Lys-Lys-Lys (Pam3CSK4) and macrophage-activating lipopeptide-2 (MALP-2) did not affect the TLR4-mediated NF-κB activation. In bone marrow-derived macrophages from TLR2-/- mice, LTA inhibited LPS-induced IκB-α phosphorylation and production of TNF, CXCL1/KC, RANTES, and IFN-β without affecting cell surface expression of TLR4. LTA did not suppress IL-1β-induced NF-κB activation mediated through signaling pathways shared with TLRs. LTAs including E. hirae LTA, but not LPS, induced association of TLR4/MD-2 complexes, which was suppressed by serum. LTA also increased association of MD-2, but not TLR4 molecules. These results demonstrate that, under serum-free conditions, LTA induces association of MD-2 molecules to promote formation of an inactive TLR4/MD-2 complex dimer that in turn prevents TLR4-mediated signaling. The presence of LTA that poorly induces TLR2-mediated activation but inhibits TLR4 signaling provides insight into the role of Gram-positive bacteria in suppressing inflammation induced by Gram-negative bacteria in organs such as the intestines where serum is absent.