Alveolar macrophages (AMs) are exposed to respirable microbial particles. Similar to phagocytes in the gastrointestinal tract, AMs can suppress inflammation after exposure to nonpathogenic organisms. IL-1R–associated kinase-M (IRAK-M) is one inhibitor of innate immunity, normally suppressing pulmonary inflammation. During pneumonia, polymorphonuclear neutrophils (PMNs) are recruited by chemotactic factors released by AMs to produce an intense inflammation. We report that intact IRAK-M is strongly expressed in resting human AMs but is cleaved in patients with pneumonia via PMN-mediated induction of caspase-6 (CASP-6) activity. PMN contact is necessary and PMN membranes are sufficient for CASP-6 induction in macrophages. PMNs fail to induce TNF-α fully in macrophages expressing CASP-6 cleavage-resistant IRAK-M. Without CASP-6 expression, PMN stimulation fails to cleave IRAK-M, degrade IκBα, or induce TNF-α. CASP-6−/− mice subjected to cecal ligation and puncture have impaired TNF-α production in the lung and decreased mortality. LPS did not induce or require CASP-6 activity demonstrating that TLR2/4 signaling is independent from the CASP-6 regulated pathway. These data define a central role for CASP-6 in PMN-driven macrophage activation and identify IRAK-M as an important target for CASP-6. PMNs de-repress AMs via CASP-6–mediated IRAK-M cleavage. This regulatory system will blunt lung inflammation unless PMNs infiltrate the alveolar spaces.