In this study we generated a novel dual specific phosphatase 4 (DUSP4) deletion mouse using a targeted deletion strategy in order to examine the role of MAP kinase phosphatase-2 (MKP-2) in immune responses. Lipopolysaccharide (LPS) induced a rapid, time and concentration-dependent increase in MKP-2 protein expression in bone marrow-derived macrophages from MKP-2^+/+ but not from MKP-2^−/− mice. LPS-induced JNK and p38 MAP kinase phosphorylation was significantly increased and prolonged in MKP-2^−/− macrophages whilst ERK phosphorylation was unaffected. MKP-2 deletion also potentiated LPS-stimulated induction of the inflammatory cytokines, IL-6, IL-12p40, TNF-α, and also COX-2 derived PGE₂ production. However surprisingly, in MKP-2^−/− macrophages, there was a marked reduction in LPS or IFNγ-induced iNOS and nitric oxide release and enhanced basal expression of arginase-1, suggesting that MKP-2 may have an additional regulatory function significant in pathogen-mediated immunity. Indeed, following infection with the intracellular parasite Leishmania mexicana, MKP-2^−/− mice displayed increased lesion size and parasite burden, and a significantly modified Th1/Th2 bias compared with wild-type counterparts. However, there was no intrinsic defect in MKP-2^−/− T cell function as measured by anti-CD3 induced IFN-γ production. Rather, MKP-2^−/− bone marrow-derived macrophages were found to be inherently more susceptible to infection with Leishmania mexicana, an effect reversed following treatment with the arginase inhibitor nor-NOHA. These findings show for the first time a role for MKP-2 in vivo and demonstrate that MKP-2 may be essential in orchestrating protection against intracellular infection at the level of the macrophage.