Bacterial peptidoglycan-derived muramyl dipeptide (MDP) and derivatives have long-recognized antiviral properties but their mechanism of action remains unclear. In recent years, the pattern-recognition receptor NOD2 has been shown to mediate innate responses to MDP. Here, we show that MDP treatment of mice infected with Influenza A virus (IAV) significantly reduces mortality, viral load and pulmonary inflammation in a NOD2-dependent manner. Importantly, the induction of type I interferon (IFN) and CCL2 chemokine was markedly increased in the lungs following MDP treatment and correlated with a NOD2-dependent enhancement in circulating monocytes. Mechanistically, the protective effect of MDP could be explained by the NOD2-dependent transient increase in recruitment of Ly6C(high) "inflammatory" monocytes and, to a lesser extent, neutrophils to the lungs. Indeed, impairment in both Ly6C(high) monocyte recruitment and survival observed in infected Nod2-/- mice treated with MDP was recapitulated in mice deficient for the chemokine receptor CCR2 required for CCL2-mediated Ly6C(high) monocyte migration from the bone marrow into the lungs. MDP-induced pulmonary monocyte recruitment occurred normally in IAV-infected and MDP-treated Ips-1-/- mice. However, IPS-1 was required for improved survival upon MDP treatment. Finally, mycobacterial N-glycolyl MDP was more potent than N-acetyl MDP expressed by most bacteria at reducing viral burden while both forms of MDP restored pulmonary function following IAV challenge. Overall, our work sheds light on the antiviral mechanism of a clinically relevant bacterial-derived compound and identifies the NOD2 pathway as a potential therapeutic target against IAV.