Despite the importance of bacterial lipopolysaccharide (LPS) in infection and inflammation, many aspects of LPS action remain poorly understood. Especially, the mechanisms by which cells recognise and react to endotoxins or endotoxin-containing particles and how cellular responses are translated into systemic effects have long remained obscure. However, the recent identification of Toll-like receptors as essential participants in endotoxin signal transduction has provided the first answers in clarifying cellular LPS responses. In this review, we discuss the consequences of the clarification of the cellular effects of LPS. Furthermore, for LPS to exert its effects, it has to be transported to its target cells and be recognised before signalling may be induced, and we shall review the current state of affairs with regard to these recognition processes. Finally, we shall investigate how current knowledge may explain endotoxin neutralisation and subsequent detoxification, either through LPS internalisation or via LPS immobilisation, or through the actions of LPS-binding molecules.