Despite recent advances in understanding macrophage activation, little is known regarding how human alveolar macrophages in health calibrate its transcriptional response to canonical TLR4 activation. In this study, we examined the full spectrum of LPS activation and determined whether the transcriptomic profile of human alveolar macrophages is distinguished by a TIR-domain-containing adapter-inducing interferon-β (TRIF)-dominant type I interferon signature. Bronchoalveolar lavage macrophages were obtained from healthy volunteers, stimulated in the presence or absence of ultrapure LPS in vitro, and whole transcriptomic profiling was performed by RNA sequencing (RNA-Seq). LPS induced a robust type I interferon transcriptional response and Ingenuity Pathway Analysis predicted interferon regulatory factor (IRF)7 as the top upstream regulator of 89 known gene targets. Ubiquitin-specific peptidase (USP)-18, a negative regulator of interferon α/β responses, was among the top up-regulated genes in addition to IL10 and USP41, a novel gene with no known biological function but with high sequence homology to USP18. We determined whether IRF-7 and USP-18 can influence downstream macrophage effector cytokine production such as IL-10. We show that IRF-7 siRNA knockdown enhanced LPS-induced IL-10 production in human monocyte-derived macrophages, and USP-18 overexpression attenuated LPS-induced production of IL-10 in RAW264.7 cells. Quantitative PCR confirmed upregulation of USP18, USP41, IL10, and IRF7. An independent cohort confirmed LPS induction of USP41 and IL10 genes. These results suggest that IRF-7 and predicted downstream target USP18, both elements of a type I interferon gene signature identified by RNA-Seq, may serve to fine-tune early cytokine response by calibrating IL-10 production in human alveolar macrophages.