The innate immune system comprises several classes of pattern recognition receptors, including Toll-like receptors (TLRs), NOD-like receptors (NLRs), and RIG-1-like receptors (RLRs). TLRs recognize microbes on the cell surface and in endosomes, whereas NLRs and RLRs detect microbial components in the cytosol. Here we discuss the recent understanding in NLRs. Two NLRs, NOD1 and NOD2, sense the cytosolic presence of the peptidoglycan fragments meso-DAP and muramyl dipeptide, respectively, and drive the activation of mitogen-activated protein kinase (MAPK) and the transcription factor NF-kappaB. A different set of NLRs induces caspase-1 activation through the assembly of large protein complexes named inflammasomes. Genetic variations in several NLR members are associated with the development of inflammatory disorders. Further understanding of NLRs should provide new insights into the mechanisms of host defense and the pathogenesis of inflammatory diseases.