Gram-negative bacterial infections, unlike viral infections, do not typically protect against subsequent viral infections. This is puzzling given that lipopolysaccharide (LPS) and double-stranded (ds) RNA both activate the TIR domain-containing adaptor-inducing interferon beta (TRIF) pathway and, thus, are both capable of eliciting an antiviral response by stimulating type I interferon (IFN) production. We demonstrate herein that SH2-containing inositol-5'-phosphatase (SHIP) protein levels are dramatically increased in murine macrophages via the MyD88-dependent pathway, by up-regulating autocrine-acting transforming growth factor-beta (TGFbeta). The increased SHIP then mediates, via inhibition of the phosphatidylinositol-3-kinase (PI3K) pathway, cytosine-phosphate-guanosine (CPG)- and LPS-induced tolerance and cross-tolerance and restrains IFN-beta production induced by a subsequent exposure to LPS or dsRNA. Intriguingly, we found, using isoform-specific PI3K inhibitors, that LPS- or cytosine-phosphate-guanosine-induced interleukin-6 (IL-6) is positively regulated by p110alpha, -gamma, and -delta but negatively regulated by p110beta. This may explain some of the controversy concerning the role of PI3K in Toll-like receptor-induced cytokine production. Consistent with our in vitro findings, SHIP(-/-) mice overproduce IFN-beta in response to LPS, and this leads to antiviral hypothermia. Thus, up-regulation of SHIP in response to Gram-negative bacterial infections probably explains the inability of such infections to protect against subsequent viral infections.