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The local and systemic production of prostaglandin E₂ (PGE₂) and its actions in phagocytes lead to immunosuppressive conditions. PGE₂ is produced at high levels during inflammation, and its suppressive effects are caused by the ligation of the E prostanoid receptors EP₂ and EP₄, which results in the production of cyclic AMP. However, PGE₂ also exhibits immunostimulatory properties due to binding to EP₃, which results in decreased cAMP levels. The various guanine nucleotide‐binding proteins (G proteins) that are coupled to the different EP receptors account for the pleiotropic roles of PGE₂ in different disease states. Here, we discuss the production of PGE₂ and the actions of this prostanoid in phagocytes from different tissues, the relative contribution of PGE₂ to the modulation of innate immune responses, and the novel therapeutic opportunities that can be used to control inflammatory responses.