In humans and experimental animals the presence of bacterial lipopolysaccharide (endotoxin, LPS) signals the presence of gram-negative bacteria. Recognition of LPS triggers gene induction by myeloid and nonmyeloid lineage cells. These inducible genes encode proteins that include cytokines, adhesive proteins, and enzymes that produce low molecular weight proinflammatory mediators. Together the products of these inducible genes upregulate host defense systems that participate in eliminating the bacterial infection. Unfortunately, these same mediators contribute to a serious human disease known as septic shock. Considerable progress has been made during the past decade in determining the sources, identities, and sequence of release of these mediators. In contrast, until recently, marked gaps in our knowledge existed regarding the identity of the LPS receptor and intracellular signaling pathways responsible for LPS-induced cell activation. The discovery in 1986 of a plasma protein termed LPS binding protein (LBP) led to the discovery of unanticipated mechanisms of LPS-induced cell activation. CD14 was found as a soluble serum protein or as a glycosylphosphatidylinositol (GPI)-anchored protein of myeloid lineage cells; it now occupies a key role in LPS-induced cell activation as we understand it today. Here we discuss how LBP enables LPS binding to CD14 and how complexes of LPS and soluble or GPI-anchored CD14 participate in cell activation. We also review the evidence supporting a model for a functional LPS receptor of myeloid cells, which is multimeric, comprised of GPI-anchored CD14 and a presently unidentified transmembrane protein that together bind LPS and initiate cell activation via kinase cascades.