Extracellular cold-inducible RNA-binding protein (eCIRP) is a recently discovered damage-associated molecular pattern. Understanding the precise mechanism by which it exacerbates inflammation is essential. Here we identified that eCIRP is a new biologically active endogenous ligand of triggering receptor expressed on myeloid cells-1 (TREM-1), fueling inflammation in sepsis. Surface plasmon resonance revealed a strong binding affinity between eCIRP and TREM-1, and fluorescence resonance energy transfer assay confirmed eCIRP’s interaction with TREM-1 in macrophages. Targeting TREM-1 by its siRNA or a decoy peptide, LP17, or by using TREM-1–/–mice dramatically reduced eCIRP-induced inflammation. We developed a potentially novel 7-aa peptide derived from human eCIRP, M3, which blocked the interaction of TREM-1 and eCIRP. M3 suppressed inflammation induced by eCIRP or agonist TREM-1 antibody cross-linking in murine macrophages or human peripheral blood monocytes. M3 also inhibited eCIRP-induced systemic inflammation and tissue injury. Treatment with M3 further protected mice from sepsis, improved acute lung injury, and increased survival. Thus, we have discovered a potentially novel TREM-1 ligand and developed a new peptide, M3, to block eCIRP–TREM-1 interaction and improve outcomes in sepsis.