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Oxidized phospholipids have diverse biological activities, many of which can be pathological, yet how they are inactivated in vivo is not fully understood. Here, we present evidence that a highly conserved host lipase, acyloxyacyl hydrolase (AOAH), can play a significant role in reducing the pro-inflammatory activities of two prominent products of phospholipid oxidation, 1-palmitoyl-2-glutaryl-sn-glycero-3-phosphocholine and 1-palmitoyl-2-(5-oxovaleroyl)-sn-glycero-3-phosphocholine. AOAH removed the sn-2 and sn-1 acyl chains from both lipids and reduced their ability to induce macrophage inflammasome activation and cell death in vitro and acute lung injury in mice. In addition to transforming Gram-negative bacterial lipopolysaccharide from stimulus to inhibitor, its most studied activity, AOAH can inactivate these important danger-associated molecular pattern molecules and reduce tissue inflammation and injury.