TLR4, a membrane receptor that functions in complex with its accessory protein myeloid differentiation factor-2 (MD-2), is a therapeutic target for bacterial infections. Taiwanofungus camphoratus is highly valued as a medicinal mushroom for cancer, hypertension, and inflammation in traditional medicine. Zhankuic acid A (ZAA) is the major pharmacologically active compound of T. camphoratus. The mechanism of action of T. camphoratus or ZAA has not been fully elucidated. We analyzed the structure of human TLR4/MD-2 complex with ZAA by X-score and HotLig modeling approaches. Two Abs against MD-2 were used to verify the MD-2/ZAA interaction. The inflammation and survival of the mice pretreated with ZAA and injected with LPS were monitored. The modeling structure shows that ZAA binds the MD-2 hydrophobic pocket exclusively via specific molecular recognition; the contact interface is dominated by hydrophobic interactions. Binding of ZAA to MD-2 reduced Ab recognition to native MD-2, similar to the effect of LPS binding. Furthermore, ZAA significantly ameliorated LPS-induced endotoxemia and Salmonella-induced diarrhea in mice. Our results suggest that ZAA, which can compete with LPS for binding to MD-2 as a TLR4/MD-2 antagonist, may be a potential therapeutic agent for gram-negative bacterial infections.