Eukaryotic organisms of the plant and animal kingdoms have developed evolutionarily conserved systems of defence against microbial pathogens. These systems depend on the specific recognition of microbial products or structures by molecules of the host innate immune system. The first mammalian molecules shown to be involved in innate immune recognition of, and defence against, microbial pathogens were the Toll-like receptors (TLRs). These proteins are predominantly but not exclusively located in the transmembrane region of host cells. Interestingly, mammalian hosts were subsequently found to also harbour cytosolic proteins with analogous structures and functions to plant defence molecules. The members of this protein family exhibit a tripartite domain structure and are characterized by a central nucleotide-binding oligomerization domain (NOD). Moreover, in common with TLRs, most NOD proteins possess a C-terminal leucine-rich repeat (LRR) domain, which is required for the sensing of microbial products and structures. Recently, the name 'nucleotide-binding domain and LRR' (NLR) was coined to describe this family of proteins. It is now clear that NLR proteins play key roles in the cytoplasmic recognition of whole bacteria or their products. Moreover, it has been demonstrated in animal studies that NLRs are important for host defence against bacterial infection. This review will particularly focus on two subfamilies of NLR proteins, the NODs and 'NALPs', which specifically recognize bacterial products, including cell wall peptidoglycan and flagellin. We will discuss the downstream signalling events and host cell responses to NLR recognition of such products, as well as the strategies that bacterial pathogens employ to trigger NLR signalling in host cells. Cytosolic recognition of microbial factors by NLR proteins appears to be one mechanism whereby the innate immune system is able to discriminate between pathogenic bacteria ('foe') and commensal ('friendly') members of the host microflora.