Specificity protein (Sp) 1 mediates the transcription of a large number of constitutive genes encoding physiological mediators. NF-κB mediates the expression of hundreds of inducible genes encoding pathological mediators. Crosstalk between Sp1 and NF-κB pathways could be pathophysiologically significant, but has not been studied. This study examined the crosstalk between the two pathways and defined the role of NF-κB signaling in LPS-induced down-regulation of Sp1 activity. Challenge of wild type mice with samonelia enteritidis LPS (10 mg/kg, i.p.) down-regulated Sp1 binding activity in lungs in a time-dependent manner, which was concomitantly associated with an increased NF-κB activity. LPS down-regulates Sp1 activity by inducing an LPS inducible Sp1-degrading enzyme (LISPDE) activity, which selectively degrades Sp1 protein, resulting in Sp1 down-regulation. Blockade of NF-κB activation in mice deficient in NF-κB p50 gene (NF-κB-KO) suppressed LISPDE activity, prevented Sp1 protein degradation, and reversed the down-regulation of Sp1 DNA binding activity and eNOS expression (an indicator of Sp1 transactivation activity). Inhibition of LISPDE activity using a selective LISPDE inhibitor mimicked the effects of NF-κB blockade. Pretreatment of LPS-challenged WT mice with a selective LISPDE inhibitor increased nuclear Sp1 protein content, restored Sp1 DNA binding activity and reversed eNOS protein down-regulation in lungs. Enhancing tissue level of Sp1 activity by inhibiting NF-κB-mediated Sp1 down-regulation increased tissue level of IL-10 and decreased tissue level of TNF- αin the lungs. NF-κB signaling mediates LPS-induced down-regulation of Sp1 activity. Activation of NF-κB pathway suppresses Sp1 activity and Sp1-mediated anti-inflammatory signals. Conversely, Sp1 signaling counter-regulates NF-κB-mediated inflammatory response. Crosstalk between NF-κB and Sp1 pathways regulates the balance between pro- and anti-inflammatory cytokines.