It is increasingly recognized that excessive glucocorticoids induce fetal intrauterine growth restriction (IUGR). Placental 11β-hydroxysteroid dehydrogenase 2 (11β-HSD2), a glucocorticoid-catalyzing enzyme, prevents active glucocorticoids from maternal circulation into the fetus, thus protecting against IUGR. Previous studies demonstrated gestational LPS exposure caused fetal IUGR. The aim of the current study was to investigate the effects of LPS on 11β-HSD2 in mice placentas and human placental trophoblasts. Pregnant ICR(CD-1) mice were i.p. injected with LPS (200 μg/kg) on gestational day 16. As expected, gestational LPS exposure downregulated 11β-HSD2 in mice placentas. In vitro, LPS downregulated 11β-HSD2 in human placental trophoblasts. Additional experiment showed that LPS, which activated NF-κB, suppressed rosiglitazone-induced activation of peroxisome proliferator-activated receptor-γ (PPARγ) in mice placentas and human placental trophoblasts. Moreover, NF-κB p65 knockdown and specific NF-κB inhibitor attenuated LPS-induced suppression of PPARγ nuclear translocation in human placental trophoblasts. In addition, NF-κB p65 knockdown attenuated LPS-induced downregulation of 11β-HSD2 in human placental trophoblasts. Mechanically, LPS promoted physical interaction between NF-κB p65 and PPARγ in the cytoplasm and nucleus of placental trophoblasts. Finally, pretreatment with rosiglitazone, a PPARγ agonist, partially alleviated LPS-induced reduction of fetal weight and crown-rump length. Taken together, these results suggest that LPS downregulates 11β-HSD2 through suppressing PPARγ in placental trophoblasts. Placental 11β-HSD2 downregulation may contribute partially to LPS-induced fetal IUGR.