Peptidoglycan (PGN) is a ubiquitous bacterial membrane product that, despite its well known pro-inflammatory properties, has also been invoked in immuno-tolerance of the gastrointestinal tract. PGN-induced mucosal IL-10 secretion and downregulation of Toll like receptors are potential mechanisms of action in the gut but there are few data on tolerogenic adaptive immune responses and PGN. Here, using blood-derived mononuclear cells, we showed that PGN induced marked cell surface expression of PD-L1 but not PD-L2 or CD80/CD86, and specifically in the CD14(+) monocytic fraction. This was reproduced at the gene level with rapid induction (<4 h) and, unlike for LPS stimulation, was still sustained at 24 h. Using transfected and native muramyl dipeptide (MDP), which is a cleavage product of PGN and a specific NOD2 agonist, in assays with wild type cells or those from patients with Crohn's disease carrying the Leu1007 frameshift mutation of NOD2, we showed that (i) both NOD2 dependent and independent signalling (appearing TLR2 mediated) occurred for PGN upregulation of PD-L1 (ii) upregulation is lost in response to MDP in patients with the homozygous mutation and (iii) PD-L1 upregulation was unaffected in patients with heterozygous mutations as previously reported for cytokine responses to MDP. The uptake of PGN and its cleavage products by the intestinal mucosa is well recognised and further work should consider PD-L1 upregulation as one potential mechanism of the commensal flora-driven intestinal immuno-tolerance. Indeed, recent work has shown that loss of PD-L1 signalling in the gut breaks CD8(+) T cell tolerance to self antigen and leads to severe autoimmune enteritis.