Airborne microbial products have been reported to promote immune responses that suppress asthma, yet how these beneficial effects take place remains controversial and poorly understood. We have found that pulmonary exposure with the bacterium Escherichia coli leads to a suppression of allergic airway inflammation, characterized by reduced airway-hyperresponsiveness, eosinophilia and cytokine production by T cells in the lung. This immune modulation was neither mediated by the induction of a Th1 response nor regulatory T cells; was dependent on TLR-4 but did not involve TLR-desensitization. Dendritic cell migration to the draining lymph nodes and subsequent activation of T cells was unaffected by prior exposure to E.coli indicating that the immunomodulation was limited to the lung environment. In non-treated control mice ovalbumin was primarily presented by airway CD11b+ CD11c+ DCs expressing high levels of MHC class II molecules whilst the DCs in E.coli-treated mice displayed a less activated phenotype and had impaired antigen presentation capacity. Consequently, in situ Th2 cytokine production by ovalbuminspecific effector T cells recruited to the airways was significantly reduced. The suppression of airways hyper responsiveness was mediated through the recruitment of IL-17-producing gd-T cells; however, the suppression of dendritic cells and T cells was mediated through a distinct mechanism that could not be overcome by the local administration of activated dendritic cells, or by the in vivo administration of TNF-alpha. Taken together, these data reveal a novel multi-component immunoregulatory pathway that acts to protect the airways from allergic inflammation.