The breakdown of toll-like receptor (TLR) tolerance results in tissue damage, and hyperactivation of the TLRs and subsequent inflammatory consequences have been implicated as risk factors for more severe forms of disease and poor outcomes from various diseases including COVID-19 and metabolic (dysfunction) associated fatty liver disease (MAFLD). Here we provide evidence that membrane bound O-acyltransferase domain containing 7 (MBOAT7) is a negative regulator of TLR signalling. MBOAT7 deficiency in macrophages as observed in patients with MAFLD and in COVID-19, alters membrane phospholipid composition. We demonstrate that this is associated with a redistribution of arachidonic acid toward proinflammatory eicosanoids, induction of endoplasmic reticulum stress, mitochondrial dysfunction, and remodelling of the accessible inflammatory-related chromatin landscape culminating in macrophage inflammatory responses to TLRs. Activation of MBOAT7 reverses these effects. These outcomes are further modulated by the MBOAT7 rs8736 (T) MAFLD risk variant. Our findings suggest that MBOAT7 can potentially be explored as a therapeutic target for diseases associated with dysregulation of the TLR signalling cascade.