Entry of bacteria into host cells is an important virulence mechanism. Through peptidoglycan recognition, the nucleotide-binding oligomerization domain (NOD) proteins NOD1 and NOD2 enable detection of intracellular bacteria and promote their clearance through initiation of a pro-inflammatory transcriptional programme and other host defence pathways, including autophagy. Recent findings have expanded the scope of the cellular compartments monitored by NOD1 and NOD2 and have elucidated the signalling pathways that are triggered downstream of NOD activation. In vivo, NOD1 and NOD2 have complex roles, both during bacterial infection and at homeostasis. The association of alleles that encode constitutively active or constitutively inactive forms of NOD2 with different diseases highlights this complexity and indicates that a balanced level of NOD signalling is crucial for the maintenance of immune homeostasis.