Staphylococcus aureus infections are known triggers for skin inflammation and can modulate immune responses. The present studies used model systems consisting of platelet-activating factor receptor–positive and –negative (PAF-R–positive and –negative) cells and PAF-R–deficient mice to demonstrate that staphylococcal lipoteichoic acid (LTA), a constituent of Gram-positive bacteria cell walls, acts as a PAF-R agonist. We show that LTA stimulates an immediate intracellular Ca²⁺ flux only in PAF-R–positive cells. Intradermal injections of LTA and the PAF-R agonist 1-hexadecyl-2-N-methylcarbamoyl glycerophosphocholine (CPAF) induced cutaneous inflammation in wild-type but not PAF-R–deficient mice. Systemic exposure to LTA or CPAF inhibited delayed-type hypersensitivity (DTH) reactions to the chemical dinitrofluorobenzene only in PAF-R–expressing mice. The inhibition of DTH reactions was abrogated by the addition of neutralizing antibodies to IL-10. Finally, we measured levels of LTA that were adequate to stimulate PAF-R in vitro on the skin of subjects with infected atopic dermatitis. Based on these studies, we propose that LTA exerts immunomodulatory effects via the PAF-R through production of the Th2 cytokine IL-10. These findings show a novel mechanism by which staphylococcal infections can inhibit Th1 reactions and thus worsen Th2 skin diseases, such as atopic dermatitis.