Sepsis, a leading cause of death worldwide, involves proinflammatory responses and inefficient bacterial clearance^,. Phagocytic cells play a crucial part in the prevention of sepsis by clearing bacteria through host innate receptors. Here we show that the FcRγ adaptor, an immunoreceptor tyrosine-based activation motif (ITAM)-bearing signal transduction subunit of the Fc receptor family, has a deleterious effect on sepsis. FcRγ^−/− mice show increased survival during peritonitis, owing to markedly increased E. coli phagocytosis and killing and to lower production of the proinflammatory cytokine tumor necrosis factor (TNF)-α. The FcRγ-associated receptor that inhibits E. coli phagocytosis is FcγRIII (also called CD16), and its absence protects mice from sepsis. FcγRIII binds E. coli, and this interaction induces FcRγ phosphorylation, recruitment of the tyrosine phosphatase SHP-1 and phosphatidylinositide-3 kinase (PI3K) dephosphorylation. Decreased PI3K activity inhibits E. coli phagocytosis and increases TNF-α production through Toll-like receptor 4. We identified the phagocytic receptor negatively regulated by FcRγ on macrophages as the class A scavenger receptor MARCO. E. coli-FcγRIII interaction induces the recruitment of SHP-1 to MARCO, thereby inhibiting E. coli phagocytosis. Thus, by binding FcγRIII, E. coli triggers an inhibitory FcRγ pathway that both impairs MARCO-mediated bacterial clearance and activates TNF-α secretion.