Cellular components released into the external milieu as a result of cell death and sensed by the body are generally termed damage-associated molecular patterns (DAMPs). Although DAMPs are conventionally thought to be protective to the host by evoking inflammatory responses important for immunity and wound repair, there is the prevailing notion that dysregulated release of DAMPs can also underlie or exacerbate disease development. However, the critical issue for how resultant DAMP-mediated responses are regulated has heretofore not been fully addressed. In the present study, we identify prostaglandin E2 (PGE2) as a DAMP that negatively regulates immune responses. We show that the production of PGE2 is augmented under cell death-inducing conditions via the transcriptional induction of the cyclooxygenase 2 (COX2) gene and that cell-released PGE2 suppresses the expression of genes associated with inflammation, thereby limiting the cell’s immunostimulatory activities. Consistent with this, inhibition of the PGE2 synthesis pathway potentiates the inflammation induced by dying cells. We also provide in vivo evidence for a protective role of PGE2 released upon acetaminophen-induced liver injury as well as a pathogenic role for PGE2 during tumor cell growth. Our study places this classically known lipid mediator in an unprecedented context—that is, an inhibitory DAMP vis-à-vis activating DAMPs, which may have translational implications for designing more effective therapeutic regimens for inflammation-associated diseases.