Extracellular miRNAs (ex-miRNAs) mediate intercellular communication and play a role in diverse physiological and pathological processes. Using small RNA sequencing, we identify that miRNAs are the most abundant RNA species in the plasma and differentially expressed in murine and human sepsis, such as miR-146a-5p. Exogenous miR-146a-5p, but not its duplex precursor, induces a strong immunostimulatory response through a newly identified UU-containing motif and TLR7 activation, and an immunotolerance by rapid IRAK-1 protein degradation via TLR7→MyD88 signaling and proteasome activation, whereas its duplex precursor acts by targeting 3' UTR of gene Ago2 binding. miR-146a knockout in mice offers protection against sepsis with attenuated interleukin-6 (IL-6) storm and organ injury, improved cardiac function, and better survival. In septic patients, the plasma miR-146a-5p concentrations are closely associated with the two sepsis outcome predictors, blood lactate and coagulopathy. These data demonstrate the importance of extracellular miR-146a-5p in innate immune regulation and sepsis pathogenesis.