The innate immune response is a first line of defense against invading pathogens; however, the magnitude of this response must be tightly regulated, as hyper- or suboptimal responses can be detrimental to the host. Systemic inflammation resulting from bacterial infection can lead to sepsis, which remains a serious problem with high mortality rates. Lyn tyrosine kinase plays a key role in adaptive immunity, although its role in innate immunity remains unclear. In this study, we show that Lyn gain-of-function (Lyn(up/up)) mice display enhanced sensitivity to endotoxin and succumb to upregulated proinflammatory cytokine production at a dose well tolerated by control animals. Endotoxin sensitivity in Lyn(up/up) mice depends on dendritic cells (DCs) and NK cells and occurs though a mechanism involving increased maturation and activation of the DC compartment, leading to elevated production of IFN-γ by NK cells. We further show that modulation of endotoxin-induced signal transduction in DCs by Lyn involves the phosphatases Src homology 2 domain-containing phosphatase-1 and SHIP-1. Collectively, we demonstrate that Lyn regulates DC physiology such that alterations in Lyn-dependent signaling have profound effects on the nature and magnitude of inflammatory responses. Our studies highlight how perturbations in signaling pathways controlling DC/NK cell-regulated responses to microbial products can profoundly affect the magnitude of innate immune responses.