The nucleotide receptor P2X7 has been shown to modulate LPS-induced macrophage production of numerous inflammatory mediators. Although the C-terminal portion of P2X7 is thought to be essential for multiple receptor functions, little is known regarding the structural motifs that lie within this region. We show here that the P2X7 C-terminal domain contains several apparent protein-protein and protein-lipid interaction motifs with potential importance to macrophage signaling and LPS action. Surprisingly, P2X7 also contains a conserved LPS-binding domain. In this report, we demonstrate that peptides derived from this P2X7 sequence bind LPS in vitro. Moreover, these peptides neutralize the ability of LPS to activate the extracellular signal-regulated kinases (ERK1, ERK2) and to promote the degradation of the inhibitor of kappaB-alpha isoform (IkappaB-alpha) in RAW 264.7 macrophages. Collectively, these data suggest that the C-terminal domain of P2X7 may directly coordinate several signal transduction events related to macrophage function and LPS action.