Macrophage activation by Gram‐negative lipopolysaccharide (LPS) has been extensively studied in an attempt to define the mechanisms that underlie innate immunity against bacterial pathogens. Dysregulation of these same mechanisms contributes to the pathophysiological consequences of bacterial sepsis. The biological actions of LPS are mediated, at least in part, by both LPS‐binding proteins and LPS receptors. Several LPS receptors (CD14, the macrophage scavenger receptor, and the β2 integrins), as well as the serum LPS‐binding protein LBP, have been cloned and studied in detail. In addition, insights gained through the use of LPS antagonists have led to a better understanding of a molecule believed to function in conjunction with LPS receptors to transduce signals from the membrane to the cytosol. More recently, the use of knockout mice has greatly expanded our knowledge of the biology of LPS receptors and binding proteins. This review will summarize various phenotypes of mice that lack genes encoding CD14, the scavenger receptor, and LBP. These knockout mice have revealed several unexpected features of LPS action in vivo. Together, these animal models may provide a means to develop and evaluate novel therapeutic approaches to the control of endotoxin shock. J. Leukoc. Biol. 64: 25–32; 1998.