Pulmonary surfactant protein A (SP-A) plays an important role in modulation of the innate immune system of the lung. Peptidoglycan (PGN), a cell wall component of gram-positive bacteria, is known to elicit the excessive proinflammatory cytokine production from immune cells. In this study we investigated whether SP-A interacts with PGN and alters PGN-elicited cellular responses. Binding studies demonstrate that PGN is not a ligand for SP-A. However, SP-A significantly reduced PGN-elicited TNF-alpha secretion by U937 cells and rat alveolar macrophages. The inhibitory effect on TNF-alpha secretion was dependent upon SP-A concentrations in physiological range. Coincubation of SP-A and PGN with HEK293 cells that had been transiently transfected with cDNA of Toll-like receptor 2 (TLR2), a cell signaling receptor for PGN, significantly attenuated PGN-induced NF-kappaB activity. SP-A directly bound to a soluble form of the recombinant extracellular TLR2 domain (sTLR2). Coincubation of sTLR2 with SP-A significantly reduced the binding of sTLR2 to PGN. These results indicate that the direct interaction of SP-A with TLR2 alters PGN-induced cell signaling. We propose that SP-A modulates inflammatory responses against the bacterial components by interactions with pattern-recognition receptors.