Toll-like receptor 2 (TLR2) and CD14 function as pattern recognition receptors for bacterial peptidoglycan (PGN). TLRs and CD14 possess repeats of the leucine-rich motif. To address the role of the extracellular domain of TLR2 in PGN signaling, we constructed CD14/TLR2 chimeras, in which residues 1-356 or 1-323 of CD14 were substituted for the extracellular domain of TLR2, and five deletion mutants of TLR2, in which the progressively longer regions of extracellular TLR2 regions were deleted. PGN induced NF-kappaB activation in HEK293 cells expressing TLR2 but not in cells expressing CD14/TLR2 chimeras. The cells transfected with a deletion mutant TLR2(DeltaCys30-Ile64) as well as TLR2(DeltaCys30-Asp160) and TLR2(DeltaCys30-Asp305) failed to respond to PGN, indicating the importance of the TLR2 region Cys(30)-Ile(64). Although TLR2(DeltaCys30-Ser39) conferred cell responsiveness to PGN, the cells expressing TLR2(DeltaSer40-Ile64) failed to induce NF-kappaB activation. In addition, NF-kappaB activity elicited by PGN was significantly attenuated in the presence of synthetic peptide corresponding to the TLR2 region Ser(40)-Ile(64). From these results, we conclude that; 1) CD14 cannot functionally replace the extracellular domain of TLR2 in PGN signaling; 2) the TLR2 region Cys(30)-Ser(39) is not required for PGN recognition; 3) the TLR2 region containing Ser(40)-Ile(64) is critical for PGN recognition.