Growing evidences indicate that Ly-GDI, an inhibitory protein of Rho GTPases, plays an essential role in regulating actin cytoskeletal alteration which is indispensible for the process such as phagocytosis. However, the role of Ly-GDI in inflammation remains largely unknown. In the current study, we found that Ly-GDI expression was significantly decreased in the IgG immune complex-injured lungs. To determine if Ly-GDI might regulate the lung inflammatory response, we constructed adenovirus vectors that could mediate ectopic expression of Ly-GDI (Adeno-Ly-GDI). In vivo mouse lung expression of Ly-GDI resulted in a significant attenuation of IgG immune complex-induced lung injury, which was due to the decreased pulmonary permeability and lung inflammatory cells, especially neutrophil accumulation. Upon IgG immune complex deposition, mice with Ly-GDI over-expression in the lungs produced significant less inflammatory mediators (TNF-α, IL-6, MCP-1, and MIP-1α) in bronchoalveolar lavage fluid when compared control mice receiving airway injection of Adeno-GFP. Mechanically, IgG immune complex-induced NF-κB activity was markedly suppressed by Ly-GDI in both alveolar macrophages and lungs as measured by luciferase assay and electrophoretic mobility shift assay. These findings suggest that Ly-GDI is a critical regulator of inflammatory injury after deposition of IgG immune complexes and that it negatively regulates the lung NF-κB activity.