Parotid secretory protein (PSP) (C20orf70) is a salivary protein of unknown function. The protein belongs to the palate, lung, and nasal epithelium clone (PLUNC) family of mucosal secretory proteins that are predicted to be structurally similar to lipid-binding and host-defense proteins including bactericidal/permeability-increasing protein and lipopolysaccharide-binding protein. However, the PLUNC proteins exhibit significant sequence variation and different biological functions have been proposed for different family members. This study tested the functional implications of the proposed similarity of PSP to the acute phase protein lipopolysaccharide-binding protein (LBP). PSP was identified in human saliva and was soluble in 70% ethanol, as shown for other PLUNC proteins. PSP binds lipopolysaccharide and can be eluted by non-ionic detergent, but not by urea or high salt. A synthetic PSP peptide, GL13NH2, which corresponds to a lipopolysaccharide-inhibiting peptide from LBP, inhibited the binding of lipopolysaccharide to both PSP and lipopolysaccharide-binding protein. Peptides from other regions of PSP and the control peptide polymyxin B showed no effect on the binding of PSP to lipopolysaccharide. GL13NH2 also inhibited lipopolysaccharide-stimulated secretion of tumor necrosis factor from macrophages. The other PSP peptides had no effect in this assay. PSP peptides had no or only minor effect on macrophage cell viability. These results indicate that PSP is a lipopolysaccharide-binding protein that is functionally related to LBP, as suggested by their predicted structural similarities.