Many host cell types, including endothelial and epithelial cells, neutrophils, monocytes, natural killer cells, dendritic cells and macrophages, initiate the first line of defense against infection by sensing conserved microbial structures through Toll-like receptors (TLRs). Recognition of microbial ligands by TLRs induces their oligomerization and triggers intracellular signaling pathways, leading to production of pro- and anti-inflammatory cytokines. Dysregulation of the fine molecular mechanisms that tightly control TLR signaling may lead to hyperactivation of host cells by microbial products and septic shock. A prior exposure to bacterial products such as lipopolysaccharide (LPS) may result in a transient state of refractoriness to subsequent challenge that has been referred to as 'tolerance'. Tolerance has been postulated as a protective mechanism limiting excessive inflammation and preventing septic shock. However, tolerance may compromise the host's ability to counteract subsequent bacterial challenge since many septic patients exhibit an increased incidence of recurrent bacterial infection and suppressed monocyte responsiveness to LPS, closely resembling the tolerant phenotype. Thus, by studying mechanisms of microbial tolerance, we may gain insights into how normal regulatory mechanisms are dysregulated, leading ultimately to microbial hypo-responsiveness and life-threatening disease. In this review, we present current theories of the molecular mechanisms that underlie induction and maintenance of 'microbial tolerance', and discuss the possible relevance of tolerance to several infectious and non-infectious diseases.