Activated protein C (APC), the only FDA-approved biotherapeutic drug for sepsis, possesses anticoagulant, antiinflammatory, and barrier-protective activities. However, the mechanisms underlying its anti-inflammatory functions are not well defined. Here, we report that the antiinflammatory activity of APC on macrophages is dependent on integrin CD11b/CD18, but not on endothelial protein C receptor (EPCR). We showed that CD11b/CD18 bound APC within specialized membrane microdomains/lipid rafts and facilitated APC cleavage and activation of protease-activated receptor-1 (PAR1), leading to enhanced production of sphingosine-1-phosphate (S1P) and suppression of the proinflammatory response of activated macrophages. Deletion of the gamma-carboxyglutamic acid domain of APC, a region critical for its anticoagulant activity and EPCR-dependent barrier protection, had no effect on its antiinflammatory function. Genetic inactivation of CD11b, PAR1, or sphingosine kinase-1, but not EPCR, abolished the ability of APC to suppress the macrophage inflammatory response in vitro. Using an LPS-induced mouse model of lethal endotoxemia, we showed that APC administration reduced the mortality of wild-type mice, but not CD11b-deficient mice. These data establish what we believe to be a novel mechanism underlying the antiinflammatory activity of APC in the setting of endotoxemia and provide clear evidence that the antiinflammatory function of APC is distinct from its barrier-protective function and anticoagulant activities.