Muramyl dipeptide (MDP), the microbial activator of nucleotide-binding oligomerization domain 2 (Nod2), induces NF-kappaB and MAPK activation, leading to the production of multiple anti-bacterial and proinflammatory molecules. In addition, MDP has been implicated in IL-1beta secretion through the regulation of caspase-1. However, the mechanisms that mediate caspase-1 activation and IL-1beta secretion in response to MDP stimulation remain poorly understood. We show here that fluorescent MDP molecules are internalized in primary macrophages and accumulate in granular structures that colocalize with markers of acidified endosomal compartments. The uptake of MDP was Nod2-independent. Upon ATP stimulation, labeled MDP was rapidly released from acidified vesicles into the cytosol, a process that required functional pannexin-1. Caspase-1 activation induced by MDP and ATP required pannexin-1 and Cryopyrin but was independent of Nod2. Conversely, induction of pro-IL-1beta mRNA by MDP stimulation was abolished in Nod2-deficient macrophages but unimpaired in macrophages lacking Cryopyrin. These studies demonstrate a Nod2-independent mechanism mediated through pore-forming pannexin-1 that is required for intracellular delivery of MDP to the cytosol and caspase-1 activation. Furthermore, the work provides evidence for distinct roles of Nod2 and Cryopyrin in the regulation of MDP-induced caspase-1 activation and IL-1beta secretion.