The recognition of peptidoglycan by cells of the innate immune system has been controversial; both TLR2 and nucleotide-binding oligomerization domain-2 (NOD2) have been implicated in this process. In the present study we demonstrate that although NOD2 is required for recognition of peptidoglycan, this leads to strong synergistic effects on TLR2-mediated production of both pro-and anti-inflammatory cytokines. Defective IL-10 production in patients with Crohn’s disease bearing loss of function mutations of NOD2 may lead to overwhelming inflammation due to a subsequent Th1 bias. In addition to the potentiation of TLR2 effects, NOD2 is a modulator of signals transmitted through TLR4 and TLR3, but not through TLR5, TLR9, or TLR7. Thus, interaction between NOD2 and specific TLR pathways may represent an important modulatory mechanism of innate immune responses.