Bacterial pneumonia remains a serious disease. Pattern recognition receptors play an integral role in neutrophil accumulation during pneumonia. Although MD-2 has been recognized as a key molecule for LPS signaling, the role of MD-2 in neutrophil accumulation in the lung during bacterial infection has not been explored. Here, we investigated the role of MD-2 in E. coli LPS-induced lung inflammation and E. coli-induced pneumonia. LPS-induced CD14-independent neutrophil accumulation was abolished in CD-14/MD-2-/- mice. MD-2-/- mice challenged with LPS displayed attenuated neutrophil influx, NF-kB activation, cytokine/chemokine expression, and lung histolopathology. MD-2-/- mice transplanted with MD-2+/+ bone marrow demonstrate decreased neutrophil influx and cytokine/chemokine in the lungs by LPS. In addition, MD-2-/- mice infected with E. coli demonstrated reduced neutrophil influx, and cytokine/chemokine expression in the lungs whereas heat killed E. coli did not induce neutrophil influx or cytokine/chemokine expression in MD-2-/- mice. Further, MD-2-/- mice displayed increased bacterial burden in the lungs and enhanced bacterial dissemination. Moreover, TLR5-/- mice infected with E. coli demonstrated attenuated neutrophil accumulation whereas MD-2/TLR5-/- mice inoculated with E. coli showed further attenuated neutrophil influx and impaired bacterial clearance. Taken together, these new findings demonstrate 1) the important role of MD-2 in the CD-14-independent LPS-mediated cascade of neutrophil influx; 2) the important roles of bone marrow and non-bone marrow cell-derived MD-2 in LPS-mediated inflammation; 2) the essential role of MD-2-dependent and MD-2 independent (TLR5) signaling in E. coli-induced neutrophil accumulation and pulmonary host defense.