Plasma membrane represents a critical battleground between plants and attacking microbes. Necrosis-and-ethylene-inducing peptide 1 (Nep1)-like proteins (NLPs), cytolytic toxins produced by some bacterial, fungal and oomycete species, are able to target on lipid membranes by binding eudicot plant-specific sphingolipids (glycosylinositol phosphorylceramide) and form transient small pores, causing membrane leakage and subsequent cell death. NLP-producing phytopathogens are a big threat to agriculture worldwide. However, whether there are R proteins/enzymes that counteract the toxicity of NLPs in plants remains largely unknown. Here we show that cotton produces a peroxisome-localized enzyme lysophospholipase, GhLPL2. Upon Verticillium dahliae attack, GhLPL2 accumulates on the membrane and binds to V. dahliae secreted NLP, VdNLP1, to block its contribution to virulence. A higher level of lysophospholipase in cells is required to neutralize VdNLP1 toxicity and induce immunity-related genes expression, meanwhile maintaining normal growth of cotton plants, revealing the role of GhLPL2 protein in balancing resistance to V. dahliae and growth. Intriguingly, GhLPL2 silencing cotton plants also display high resistance to V. dahliae, but show severe dwarfing phenotype and developmental defects, suggesting GhLPL2 is an essential gene in cotton. GhLPL2 silencing results in lysophosphatidylinositol over-accumulation and decreased glycometabolism, leading to a lack of carbon sources required for plants and pathogens to survive. Furthermore, lysophospholipases from several other crops also interact with VdNLP1, implying that blocking NLP virulence by lysophospholipase may be a common strategy in plants. Our work demonstrates that overexpressing lysophospholipase encoding genes have great potential for breeding crops with high resistance against NLP-producing microbial pathogens.