The intracellular innate immune receptor NOD1 detects Gram-negative bacterial peptidoglycan (PG) to induce autophagy and inflammatory responses in host cells. To date, the intracellular compartment in which PG is detected by NOD1 and whether NOD1 directly interacts with PG are two questions that remain to be resolved. To address this, we used outer membrane vesicles (OMVs) from pathogenic bacteria as a physiological mechanism to deliver PG into the host cell cytosol. We report that OMVs induced autophagosome formation and inflammatory IL-8 responses in epithelial cells in a NOD1- and RIP2-dependent manner. PG contained within OMVs colocalized with both NOD1 and RIP2 in EEA1-positive early endosomes. Further, we provide evidence for direct interactions between NOD1 and PG. Collectively, these findings demonstrate that NOD1 detects PG within early endosomes, thereby promoting RIP2-dependent autophagy and inflammatory signaling in response to bacterial infection.