In the acute phase response to a variety of insults a rise in the levels of the acute phase proteins, including elevations of serum alpha 1 acid glycoprotein (AAG) occurs. The physiological role of AAG is unknown, however, the time course of AAG production in the acute phase response together with its strong affinity for basic compounds suggests that AAG may function as an immune modulator to bind both exogenous and endogenous inflammatory mediators. Using E. coli lipopolysaccharide (LPS), an initiator of the acute inflammatory response associated with septic shock, we demonstrate that AAG-LPS complexes can activate mouse macrophages in vitro. In a mouse animal model of sepsis, AAG was shown to protect against meningococcal endotoxin. To pursue the mechanism of AAG action we demonstrated that AAG interacts directly with LPS using dynamic light scattering particle sizing and particle mobility. We also determined the enthalpy of interaction of AAG and LPS and showed that AAG leads to agglutination of LPS impregnated rabbit red blood cells. These studies suggest that AAG may function as an immune-modulator in the acute phase response, possibly by counter-regulating the activity of macrophage pro-inflammatory cytokines.