The cylindromatosis tumor suppressor (CYLD) is a deubiquitinating enzyme that has been implicated in various aspects of adaptive and innate immune responses. Nevertheless, the role of CYLD in the function of specific types of immune cells remains elusive. In this report we have used conditional gene targeting in mice to address the role of the deubiquitinating activity of CYLD in the myelomonocytic lineage. Truncation of the deubiquitinating domain of CYLD specifically in myelomonocytic cells impaired the development of lethal LPS-induced endotoxic shock and the accumulation of thioglycollate-elicited peritoneal macrophages. Our data establish CYLD as a regulator of monocyte-macrophage activation in response to inflammatory stimuli and identify it as a potential target for therapeutic intervention in relevant inflammatory disorders in humans.