Since the discovery of fatty acid hydroxy fatty acids (FAHFAs), significant progress has been made in understanding their regulation, biochemistry, and physiological activities. Here, we contribute to this understanding by revealing that inflammation induces the production of fatty acid hydroxy stearic acids and fatty acid hydroxyoctadecadienoic acids in white adipose tissue depots and in adipocytes cocultured with macrophages. In lipopolysaccharide (LPS)-induced coculture systems, we confirm that adipose triglyceride lipase is required for inflammation-induced FAHFA generation and demonstrate that inflammation is necessary for producing hydroxy fatty acids. Chemically synthesized fatty acid hydroxyoctadecadienoic acids show anti-inflammatory activities in vivo, but only at supraphysiological concentrations. While endogenous FAHFAs are unlikely to be anti-inflammatory due to their low concentrations, conversion of proinflammatory hydroxy fatty acids into FAHFAs may dampen inflammation. Indeed, we demonstrate that proinflammatory lipids, such as hydroxyeicosatetraenoic acids (HETEs) and leukotriene B4 (LTB4), can be converted by cells in culture to weakly anti-inflammatory FAHFAs.