Tumor necrosis factor alpha (TNF-α) and glucocorticoids are widely recognized as mutually antagonistic regulators of adaptive immunity and inflammation. Surprisingly, we show here that they cooperatively regulate components of innate immunity. The Toll-like receptor 2 (TLR2) gene encodes a transmembrane receptor critical for triggering innate immunity. Although TLR2 mRNA and protein are induced by inflammatory molecules such as TNF-α, we show that TLR2 is also induced by the anti-inflammatory glucocorticoids in cells where they also regulate MKP-1 mRNA and protein levels. TNF-α and glucocorticoids cooperate to regulate the TLR2 promoter, through the involvement of a 3′ NF-κB site, a STAT-binding element, and a 3′ glucocorticoid response element (GRE). Molecular studies show that the IκBα superrepressor or a STAT dominant negative element prevented TNF-α and dexamethasone stimulation of TLR2 promoter. Similarly, an AF-1 deletion mutant of glucocorticoid receptor or ablation of a putative GRE notably reduced the cooperative regulation of TLR2. Using chromatin immunoprecipitation assays, we demonstrate that all three transcription factors interact with both endogenous and transfected TLR2 promoters after stimulation by TNF-α and dexamethasone. Together, these studies define novel signaling mechanism for these three transcription factors, with a profound impact on discrimination of innate and adaptive immune responses.