We have positionally cloned the Ym1 gene, with a duplication and a promoter polymorphism, as a major regulator of inflammation. Mice with the RIIIS/J haplotype, with the absence of Ym1 expression, showed reduced susceptibility to mannan-enhanced collagen antibody–induced arthritis and to chronic arthritis induced by intranasal exposure of mannan. Depletion of lung macrophages alleviated arthritis, whereas intranasal supplement of Ym1 protein to Ym1-deficient mice reversed the disease, suggesting a key role of Ym1 for inflammatory activity by lung macrophages. Ym1-deficient mice with pneumonitis had less eosinophil infiltration, reduced production of type II cytokines and IgG1, and skewing of macrophages toward alternative activation due to enhanced STAT6 activation. Proteomics analysis connected Ym1 polymorphism with changed lipid metabolism. Induced PPAR-γ and lipid metabolism in Ym1-deficient macrophages contributed to cellular polarization. In conclusion, the natural polymorphism of Ym1 regulates alternative activation of macrophages associated with pulmonary inflammation.