Cationic antimicrobial protein of M _r 37 kDa (CAP37) is a multifunctional protein isolated from the granules of human neutrophils, which has important implications in host defense and inflammation. CAP37 was initially recognized for its strong antibiotic activity against Gram‐negative bacteria and was viewed as a component of the oxygen‐independent killing mechanism of the neutrophil. However, we now know that CAP37 has more far reaching and important functions. It is a physiological protein released during inflammation with a high potential of regulating monocyte/macrophage functions, such as chemotaxis, increased survival, and differentiation. Recently, it has been demonstrated that CAP37 binds endotoxin. It has the structure of a serine esterase but lacks enzymatic activity. The bactericidal and endotoxin binding domains of the molecule have been delineated. The identification of functional peptides should provide new insight into the mechanisms of endotoxin binding, antimicrobial activity, and chemotaxis and in the long term provide key insights into therapies for treating infections and endotoxic shock. J. Leukoc. Biol. 57: 805–812; 1995.