The major cell wall components of bacteria are lipopolysaccharide, peptidoglycan, and teichoic acid. These molecules are known to trigger strong innate immune responses in the host. The molecular mechanisms by which the host recognizes the peptidoglycan of Gram-positive bacteria and amplifies this peptidoglycan recognition signals to mount an immune response remain largely unclear. Recent, elegant genetic and biochemical studies are revealing details of the molecular recognition mechanism and the signalling pathways triggered by bacterial peptidoglycan. Here we review recent progress in elucidating the molecular details of peptidoglycan recognition and its signalling pathways in insects. We also attempt to evaluate the importance of this issue for understanding innate immunity.