Neutrophils are critical mediators of host defense in pathogen-induced and sterile inflammation. Excessive neutrophil activation has been associated with increased host pathology through collateral organ damage. The beneficial aspects of neutrophil activation, particularly in sterile inflammation, are less well defined. We observed accumulation of nuclear debris in the lungs of neutropenic mice exposed to acid-induced injury compared to wild-type. Size analysis of DNA-debris showed that neutropenic mice were unable to degrade extracellular DNA fragments. In addition, we found that neutrophils are able to differentially express DNA-degrading and repair-associated genes and proteins. Once neutrophils are at sites of lung inflammation they are able to phagocytose and degrade extracellular DNA. This neutrophil-dependent DNA degradation occurs in a MyD88-dependent pathway. The increased DNA-debris in neutropenic mice was associated with dysregulated alveolar repair and the phenotype is rescued by intra-tracheal administration of DNAseI. Thus, we show a novel mechanism as part of the inflammatory response, in which neutrophils engulf and degrade extracellular DNA fragments and allow for optimal organ repair.