Mutations in the leucine-rich repeat (LRR) domain of Nod2 have been implicated in the pathogenesis of Crohn's disease, yet the function of Nod2 and regulation of the Nod2 pathway remain unclear. In this study, we determined that mitogen-activated protein kinase kinase transforming growth factor (TGF)-beta-activated kinase 1 (TAK1) interacts with Nod2 and is required for Nod2-mediated NF-kappaB activation. The dominant negative form of TAK1 abolished muramyl dipeptide-induced NF-kappaB activation in Nod2-expressing cells. Nod2, acting in a reciprocal manner, inhibited TAK1-induced NF-kappaB activation in RICK-deficient embryonic fibroblasts. Nod2 appears to interact with TAK1 through its LRR region to exert its inhibitory effect on TAK1-induced NF-kappaB activation. Further, wild-type LRR more effectively suppressed NF-kappaB activation induced by TAK1 than LRR with a 3020insC mutation. Considered together, these findings demonstrate a critical role for TAK1 in Nod2-mediated innate immune responses and reveal a novel function for Nod2 in the regulation of the TAK1 signaling pathway.