The Gram-negative bacterial outer membrane contains lipopolysaccharide, an endotoxin which potently stimulates the mammalian innate immune response. This response involves a relay of specialized complexes, culminating in transfer of lipopolysaccharide from the CD14 receptor to Toll-like receptor 4 (TLR4) at the plasma membrane, leading to activation of downstream inflammatory responses. This pathway is key in host defense against pathogenic infections, and is also a leading cause of sepsis. The transient nature of these complexes has hampered the elucidation of their molecular details. To tackle this, we have developed structurally-detailed computational models for the TLR4 cascade, and leveraged this to establish the modes of action of novel anti-endotoxic peptides that occur in wounds. Using a multiscale simulation approach, we first developed a platform allowing us to trace in near-atomic resolution each component of the TLR4 cascade. We demonstrate that lipopolysaccharide molecules traversing the receptor cascade are progressively funnelled along an affinity gradient, favoring transfer to the terminal receptor-signalling complex at the plasma membrane surface. Subsequently, we focused on multi-functional peptides that occur naturally as part of the clotting pathway in wounds, where they play anti-bacterial and anti-endotoxic roles. By integrating diverse structural, biophysical, and cellular data with simulation, we determine the bound conformations of these peptides with lipopolysaccharide, and also identify a previously undisclosed pH-dependent inhibitory interaction with CD14 that blocks TLR4-induced inflammation. Collectively, this work helps to unravel the key structural determinants governing endotoxin recognition in the innate immune pathway, and provides novel therapeutic routes to targeting bacterial sepsis and endotoxic shock.