Host response to infectious agents must be rapid and powerful. One mechanism is the release of presynthesized membrane-bound TNF. TNF shedding is mediated by TNF-α converting enzyme, which is selectively inhibited by the tissue inhibitor of metalloproteinase 3 (TIMP3). We show that loss of TIMP3 impacts innate immunity by dysregulating cleavage of TNF and its receptors. Cultured timp3−/− macrophages release more TNF in response to LPS than wild-type macrophages. In timp3−/− mice, LPS causes serum levels of TNF and its receptors to rise more rapidly and remain higher compared with wild-type mice. The altered kinetics of ligand and receptor shedding enhances TNF signaling in timp3−/− mice, indicated by elevated serum IL-6. Physiologically, timp3−/− mice are more susceptible to LPS-induced mortality. Ablation of the TNF receptor gene p55 (Tnfrsf1a) or treatment with a synthetic metalloproteinase inhibitor rescues timp3−/− mice. Thus, TIMP3 is essential for normal innate immune function.