Semapimod, a tetravalent guanylhydrazone, suppresses inflammatory cytokine production and has potential in a variety of inflammatory and autoimmune disorders. The mechanism of action of Semapimod is not well understood. In this study, we demonstrate that in rat IEC-6 intestinal epithelioid cells, Semapimod inhibits activation of p38 MAPK and NF-κB and induction of cyclooxygenase-2 by TLR ligands, but not by IL-1β or stresses. Semapimod inhibits TLR4 signaling (IC50 ≈0.3 μmol) and acts by desensitizing cells to LPS; it fails to block responses to LPS concentrations of ≥5 μg/ml. Inhibition of TLR signaling by Semapimod is almost instantaneous: the drug is effective when applied simultaneously with LPS. Semapimod blocks cell-surface recruitment of the MyD88 adapter, one of the earliest events in TLR signaling. gp96, the endoplasmic reticulum-localized chaperone of the HSP90 family critically involved in the biogenesis of TLRs, was identified as a target of Semapimod using ATP-desthiobiotin pulldown and mass spectroscopy. Semapimod inhibits ATP-binding and ATPase activities of gp96 in vitro (IC50 ≈0.2-0.4 μmol). On prolonged exposure, Semapimod causes accumulation of TLR4 and TLR9 in perinuclear space, consistent with endoplasmic reticulum retention, an anticipated consequence of impaired gp96 chaperone function. Our data indicate that Semapimod desensitizes TLR signaling via its effect on the TLR chaperone gp96. Fast inhibition by Semapimod is consistent with gp96 participating in high-affinity sensing of TLR ligands in addition to its role as a TLR chaperone.