Endotoxin is a major component of the outer leaflet of the outer membrane of Gram-negative bacteria and is composed of carbohydrates, fatty acids, phosphates, and associated metal ions. Endotoxin is also known as lipopolysaccharide (LPS) and varies in its carbohydrate and lipid composition between bacterial strains and species. However, several structural features are common to most LPS molecules, including a negatively charged hydrophilic heteropolysaccharide (O-antigen), a core oligosaccharide region, and a lipid A portion that usually contains two glucosamines coupled to six fatty acids. Lipid A is the toxic component of LPS and its bioactivity depends on its disaccharide, phosphate, and fatty acid content. Endotoxin is widely present in the environment, including dust, animal waste, foods, and other materials generated from, or exposed to, Gram-negative bacterial products. Occupational exposure to endotoxin (e.g., as a bioaerosol) is associated with airway disease, and endotoxin presentation to the tissues or blood initiates a profound immunological response. In the lung, the alveolar macrophage is the key in the recognition and host response to inhaled endotoxin. Endotoxin detection by the macrophage via cell surface receptors such as Toll-like receptor-4 results in the activation of multiple signaling cascades that trigger the production of both pro- and anti-inflammatory mediators. Host responses following endotoxin challenge are dependent on the individual genetic background and the anatomical site and associated cell types. If the responses are too robust, adverse consequences, such as pulmonary edema and bronchospasm, can occur. Also, lobar pneumonia or endotoxemia from infections of other organ systems can cause diffuse acute lung injury, septic shock, and death. The management and treatment of individuals exposed to LPS encompass the use of antibiotics, bronchodilators, inhaled corticosteroids, and activated protein C. In cases of an overwhelming bacterial infection, supportive measures include supplemental oxygen, intravascular fluid administration, vasopressors, stress-dose corticosteroids, and mechanical ventilation.