ABSTRACT Mammalian lipopolysaccharide (LPS) binding proteins (LBPs) occur mainly in extracellular fluids and promote LPS delivery to specific host cell receptors. The function of LBPs has been studied principally in the context of host defense; the possible role of LBPs in nonpathogenic host-microbe interactions has not been well characterized. Using the Euprymna scolopes-Vibrio fischeri model, we analyzed the structure and function of an LBP family protein, E. scolopes LBP1 (EsLBP1), and provide evidence for its role in triggering a symbiont-induced host developmental program. Previous studies showed that, during initial host colonization, the LPS of V. fischeri synergizes with peptidoglycan (PGN) monomer to induce morphogenesis of epithelial tissues of the host animal. Computationally modeled EsLBP1 shares some but not all structural features of mammalian LBPs that are thought important for LPS binding. Similar to human LBP, recombinant EsLBP1 expressed in insect cells bound V. fischeri LPS and Neisseria meningitidis lipooligosaccharide (LOS) with nanomolar or greater affinity but bound Francisella tularensis LPS only weakly and did not bind PGN monomer. Unlike human LBP, EsLBP1 did not bind N. meningitidis LOS:CD14 complexes. The eslbp1 transcript was upregulated ~22-fold by V. fischeri at 24 h postinoculation. Surprisingly, this upregulation was not induced by exposure to LPS but, rather, to the PGN monomer alone. Hybridization chain reaction-fluorescent in situ hybridization (HCR-FISH) and immunocytochemistry (ICC) localized eslbp1 transcript and protein in crypt epithelia, where V. fischeri induces morphogenesis. The data presented here provide a window into the evolution of LBPs and the scope of their roles in animal symbioses. IMPORTANCE Mammalian lipopolysaccharide (LPS)-binding protein (LBP) is implicated in conveying LPS to host cells and potentiating its signaling activity. In certain disease states, such as obesity, the overproduction of this protein has been a reliable biomarker of chronic inflammation. Here, we describe a symbiosis-induced invertebrate LBP whose tertiary structure and LPS-binding characteristics are similar to those of mammalian LBPs; however, the primary structure of this distantly related squid protein (EsLBP1) differs in key residues previously believed to be essential for LPS binding, suggesting that an alternative strategy exists. Surprisingly, symbiotic expression of eslbp1 is induced by peptidoglycan derivatives, not LPS, a pattern converse to that of RegIIIγ, an important mammalian immunity protein that binds peptidoglycan but whose gene expression is induced by LPS. Finally, EsLBP1 occurs along the apical surfaces of all the host’s epithelia, suggesting that it was recruited from a general defensive role to one that mediates specific interactions with its symbiont