With the recent discovery of NOD2 as the first susceptibility gene linked with Crohn's disease, research is now focused on attempting to explain the biological role of NOD2 and how mutations can contribute to the development of this inflammatory disease. Biochemical studies have revealed that NOD2 is in fact a protein involved in the innate immune detection of bacterial products. More specifically, NOD2 recognizes a fragment of peptidoglycan, called muramyl dipeptide, that is found in the cell walls of both Gram-negative and Gram-positive bacteria. This recognition event triggers a pro-inflammatory signalling cascade regulated by the transcription factor NF-kappa B. The complex cellular responses emanating from the interaction of NOD2 and its ligand are thought to touch on many aspects of immune function, including bacterial killing, cytokine release, stimulation and maturation of antigen-presenting cells, and the regulation of the adaptive immune response. Defining these NOD2-regulated responses, and how mutations in the gene encoding this protein disrupt these responses, will be key to understanding the pathogenesis of Crohn's disease.