Growing evidence suggests that versican is important in the innate immune response to lung infection. Our goal was to understand the regulation of macrophage-derived versican and the role it plays in innate immunity. We first defined the signaling events that regulate versican expression using bone marrow derived macrophages (BMDM) from mice lacking specific Toll-like receptors (TLR), TLR adaptor molecules or the type I interferon receptor (IFNAR1). We show that LPS and polyinosinic-polycytidylic acid [Poly(I:C)] trigger a signaling cascade involving TLR3 or 4, the Trif adaptor, Type I interferons and IFNAR1, leading to increased expression of versican by macrophages and implicating versican as an interferon-stimulated gene. The signaling events regulating versican are distinct from those for hyaluronan synthase 1 (Has1) and syndecan-4 in macrophages. Has1 expression requires TLR2 and MyD88. Syndecan-4 requires TLR2, TLR3 or TLR4 and both MyD88 and Trif. Neither Has1 nor syndecan-4 is dependent on Type 1 interferons. The importance of macrophage-derived versican in lungs was determined using LysM/Vcan-/- mice. These studies show increased recovery of inflammatory cells in the bronchoalveolar lavage fluid of Poly(I:C)-treated LysM/Vcan-/- mice, as compared to control mice. IFN-β and IL-10, two important anti-inflammatory molecules, are significantly decreased in both Poly(I:C) treated BMDM from LysM/Vcan-/- mice and BAL fluid from Poly(I:C)-treated LysM/Vcan-/- mice, as compared to control mice. In short, Type I interferon signaling regulates versican expression and versican is necessary for Type I interferon production. These findings suggest that macrophage-derived versican is an immunomodulatory molecule with anti-inflammatory properties in acute pulmonary inflammation.