Potent TLR4-dependent cell activation by gram-negative bacterial endotoxins depends on sequential endotoxin-protein and protein-protein interactions with LPS-binding protein, CD14, myeloid differentiation protein 2 (MD-2), and TLR4. Previous studies have suggested that reduced agonist potency of underacylated endotoxins (i.e., tetra- or penta- vs hexa-acylated) is determined by post-CD14 interactions. To better define the molecular basis of the differences in agonist potency of endotoxins differing in fatty acid acylation, we compared endotoxins (lipooligosaccharides (LOS)) from hexa-acylated wild-type (wt), penta-acylated mutant msbB meningococcal strains as well as tetra-acylated LOS generated by treatment of wt LOS with the deacylating enzyme, acyloxyacylhydrolase. To facilitate assay of endotoxin:protein and endotoxin:cell interactions, the endotoxins were purified after metabolic labeling with [3H]- or [14C]acetate. All LOS species tested formed monomeric complexes with MD-2 in an LPS-binding protein- and CD14-dependent manner with similar efficiency. However, msbB LOS:MD-2 and acyloxyacylhydrolase-treated LOS:MD-2 were at least 10-fold less potent in inducing TLR4-dependent cell activation than wt LOS:MD-2 and partially antagonized the action of wt LOS:MD-2. These findings suggest that underacylated endotoxins produce decreased TLR4-dependent cell activation by altering the interaction of the endotoxin:MD-2 complex with TLR4 in a way that reduces receptor activation. Differences in potency among these endotoxin species is determined not by different aggregate properties, but by different properties of monomeric endotoxin:MD-2 complexes.