Nicotine stimulation of α7 nicotinic acetylcholine receptor (α7 nAChR) powerfully inhibits pro-inflammatory cytokine production in lipopolysaccharide (LPS)-stimulated macrophages and in experimental models of endotoxemia. A signaling pathway downstream from the α7 nAChRs, which involves the collaboration of JAK2/STAT3 and NF-κB to interfere with signaling by Toll-like receptors (TLRs), has been implicated in this anti-inflammatory effect of nicotine. Here, we identifiy an alternative mechanism involving interleukin-1 receptor-associated kinase M (IRAK-M), a negative regulator of innate TLR-mediated immune responses. Our data show that nicotine up-regulates IRAK-M expression at the mRNA and protein level in human macrophages, and that this effect is secondary to α7 nAChR activation. By using selective inhibitors of different signaling molecules downstream from the receptor, we provide evidence that activation of STAT3, via either JAK2 and/or PI3K, through a single (JAK2/PI3K/STAT3) or two convergent cascades (JAK2/STAT3 and PI3K/STAT3), is necessary for nicotine-induced IRAK-M expression. Moreover, down-regulation of this expression by small interfering RNAs specific to the IRAK-M gene significantly reverses the anti-inflammatory effect of nicotine on LPS-induced TNF-α production. Interestingly, macrophages pre-exposed to nicotine exhibit higher IRAK-M levels and reduced TNF-α response to an additional LPS challenge, a behavior reminiscent of the ‘endotoxin tolerant’ phenotype identified in monocytes either pre-exposed to LPS or from immunocompromised septic patients. Since nicotine is a major component of tobacco smoke and increased IRAK-M expression has been considered one of the molecular determinants for the induction of the tolerant phenotype, our findings showing IRAK-M overexpression could partially explain the known influence of smoking on the onset and progression of inflammatory and infectious diseases.