Tumor necrosis factor (TNF)-α is a cytokine produced by alveolar macrophages in response to LPS in the lung. Clara cells are bronchiolar epithelial cells that produce a variety of proinflammatory cytokines in response to LPS but not to TNF-α. In this study, we examined whether TNF-α affects Clara cell cytokine production in the setting of LPS stimulation. Using a transformed murine Clara cell line (C22), we observed that both LPS and TNF-α induced production of keratinocyte-derived chemokine (KC) and monocyte chemoattractant protein (MCP)-1. We also found that simultaneous LPS and TNF-α stimulation is synergistic for KC production, but additive for MCP-1 production. By using a Transwell coculture system of RAW264.7 macrophages and Clara cells isolated from C57Bl/6 mice, we found that macrophages produce a soluble factor that enhances Clara cell KC production in response to LPS. Cocultures of Clara cells from mice deficient in TNF-α receptors with RAW264.7 macrophages demonstrated that the effect of macrophages on Clara cells is mediated primarily via TNF-α. To determine whether these findings occur in vivo, we treated wild-type and TNF receptor–deficient mice intratracheally with LPS and examined the expression of KC. LPS-treated, TNF receptor–deficient mice showed much less KC mRNA in airway epithelial cells compared with wild-type mice. In contrast, a similar number of KC-expressing cells was seen in the lung periphery. Thus, upregulation of KC by Clara cells in the setting of LPS stimulation is largely dependent on TNF-α originating from alveolar macrophages. These findings shed light on macrophage–Clara cell interactions in regulating the pulmonary inflammatory response to LPS.