Peptidoglycan recognition protein (PGRP) is conserved from insects to mammals. In insects, PGRP recognizes bacterial cell wall peptidoglycan (PGN) and activates prophenoloxidase cascade, a part of the insect antimicrobial defense system. Because mammals do not have the prophenoloxidase cascade, its function in mammals is unknown. However, it was suggested that an identical protein (Tag7) was a tumor necrosis factor-like cytokine. Therefore, the aim of this study was to identify the function of PGRP in mammals. Mouse PGRP bound to PGN with fast kinetics and nanomolar affinity (Kd = 13 nm). The binding was specific for polymeric PGN or Gram-positive bacteria with unmodified PGN, and PGRP did not bind to other cell wall components or Gram-negative bacteria. PGRP mRNA and protein were expressed in neutrophils and bone marrow cells, but not in spleen cells, mononuclear cells, T or B lymphocytes, NK cells, thymocytes, monocytes, and macrophages. PGRP was not a PGN-lytic or a bacteriolytic enzyme, but it inhibited the growth of Gram-positive but not Gram-negative bacteria. PGRP inhibited phagocytosis of Gram-positive bacteria by macrophages, induction of oxidative burst by Gram-positive bacteria in neutrophils, and induction of cytokine production by PGN in macrophages. PGRP had no tumor necrosis factor-like cytotoxicity for mammalian cells, and it was not chemotactic on its own or in combination with PGN. Therefore, mammalian PGRP binds to PGN and Gram-positive bacteria with nanomolar affinity, is expressed in neutrophils, and inhibits growth of bacteria.