MAPK activity is negatively regulated by members of the dual specificity 
phosphatase (Dusp) family, which differ in expression, substrate specificity, 
and subcellular localization. Here, we investigated the function of Dusp16/MKP-7 
in the innate immune system. The Dusp16 isoforms A1 and B1 were inducibly 
expressed in macrophages and dendritic cells following Toll-like receptor 
stimulation. A gene trap approach was used to generate Dusp16-deficient mice. 
Homozygous Dusp16tp/tp mice developed without gross abnormalities but died 
perinatally. Fetal liver cells from Dusp16tp/tp embryos efficiently 
reconstituted the lymphoid and myeloid compartments with Dusp16-deficient 
hematopoietic cells. However, GM-CSF-induced proliferation of bone marrow 
progenitors in vitro was impaired in the absence of Dusp16. In vivo challenge 
with Escherichia coli LPS triggered higher production of IL-12p40 in mice with a 
Dusp16-deficient immune system. In vitro, Dusp16-deficient macrophages, but not 
dendritic cells, selectively overexpressed a subset of TLR-induced genes, 
including the cytokine IL-12. Dusp16-deficient fibroblasts showed enhanced 
activation of p38 and JNK MAPKs. In macrophages, pharmacological inhibition and 
siRNA knockdown of JNK1/2 normalized IL-12p40 secretion. Production of IL-10 and 
its inhibitory effect on IL-12 production were unaltered in Dusp16tp/tp 
macrophages. Altogether, the Dusp16 gene trap mouse model identifies an 
essential role in perinatal survival and reveals selective control of 
differentiation and cytokine production of myeloid cells by the MAPK phosphatase 
Dusp16.