Many groups of Gram-negative bacteria cause diseases that are harmful to sheep. Toll-like receptor 4 (TLR4), which is critical for detecting Gram-negative bacteria by the innate immune system, is activated by lipopolysaccharide (LPS) to initiate inflammatory responses and oxidative stress. Oxidation intermediates are essential activators of oxidative stress, as low levels of free radicals form a stressful oxidative environment that can clear invading pathogens. NO is an oxidation intermediate and its generation is regulated by nitric oxide synthase (iNOS). Guanosine triphosphate cyclohydrolase (GCHI) is the rate-limiting enzyme for tetrahydrobiopterin (BH4) synthesis, which is essential for the production of inducible iNOS. Previously, we made vectors to overexpress the sheep TLR4 gene. Herein, first generation (G1) of transgenic sheep was stimulated with LPS in vivo and in vitro, and oxidative stress and GCHI expression were investigated. Oxidative injury caused by TLR4 overexpression was tightly regulated in tissues. However, the transgenic (Tg) group still secreted nitric oxide (NO) when an iNOS inhibitor was added. Furthermore, GCHI expression remained upregulated in both serum and monocytes/macrophages. Thus, overexpression of TLR4 in transgenic sheep might accelerate the clearance of invading microbes through NO generation following LPS stimulation. Additionally, TLR4 overexpression also enhances GCHI activation.