The purpose of this study was to identify the functional significance of the binding of soluble CD14 (sCD14) to bacterial peptidoglycan (PGN) and to compare the structural requirements of sCD14 for the binding to PGN and lipopolysaccharide (LPS) and for sCD14-mediated enhancement of PGN- and LPS-induced cell responses. sCD14 did not facilitate the responses of membrane CD14 (mCD14)-negative pre-B 70Z/3 cells to PGN, although it facilitated the responses of these cells to LPS and although mCD14 facilitated the responses of 70Z/3 cells to PGN. sCD14 enhanced mCD14-mediated cell activation by both PGN and LPS, but only the responses to LPS, and not to PGN, were enhanced by LPS-binding protein. Four 4- or 5-amino-acid-long sequences within the 65-amino-acid N-terminal region of sCD14 were needed for binding to both PGN and LPS and for enhancement of cell activation by both PGN and LPS. However, deletions of individual sequences had different effects on the ability of sCD14 to bind to PGN and to LPS and on the ability to enhance the responses to PGN and to LPS. Thus, there are different structural requirements of sCD14 for binding to PGN and to LPS and for the enhancement of PGN- and LPS-induced cell activation.