The protective effects of prostacyclin and its stable analogue iloprost are mediated by elevation of intracellular cyclic AMP (cAMP) leading to enhancement of the peripheral actin cytoskeleton and cell-cell adhesive structures. This study tested the hypothesis that iloprost may exhibit protective effects against lung injury and endothelial barrier dysfunction induced by bacterial wall lipopolysaccharide (LPS). Endothelial barrier dysfunction was assessed by measurements of transendothelial permeability, morphologically and by analysis of LPS-activated inflammatory signalling. In vivo, C57BL/6J mice were challenged with LPS with or without iloprost or 8-bromoadenosine-3',5'-cyclic monophosphate (Br-cAMP) treatment. Lung injury was monitored by measurements of bronchoalveolar lavage protein content, cell count and Evans blue extravasation. Iloprost and Br-cAMP attenuated the disruption of the endothelial monolayer, and suppressed the activation of p38 mitogen-activated protein kinase (MAPK), the nuclear factor (NF)-κB pathway, Rho signalling, intercellular adhesion molecular (ICAM)-1 expression and neutrophil migration after LPS challenge. In vivo, iloprost was effective against LPS-induced protein and neutrophil accumulation in bronchoalveolar lavage fluid, and reduced myeloperoxidase activation, ICAM-1 expression and Evans blue extravasation in the lungs. Inhibition of Rac activity abolished the barrier-protective and anti-inflammatory effects of iloprost and Br-cAMP. Iloprost-induced elevation of intracellular cAMP triggers Rac signalling, which attenuates LPS-induced NF-κB and p38 MAPK inflammatory pathways and the Rho-dependent mechanism of endothelial permeability.