Asthma is a familial inflammatory disease of the airways of the lung. Microbial exposures in childhood protect against asthma through unknown mechanisms. The innate immune system is able to identify microbial components through a variety of pattern-recognition receptors (PRRs). NOD1 is an intracellular PRR that initiates inflammation in response to bacterial diaminopimelic acid (iE-DAP). The NOD1 gene is on chromosome 7p14, in a region that has been genetically linked to asthma. We carried out a systematic search for polymorphism in the gene. We found an insertion-deletion polymorphism (ND1+32656) near the beginning of intron IX that accounted for similar to 7% of the variation in IgE in two panels of families (P < 0.0005 in each). Allele*2 (the insertion) was associated with high IgE levels. The same allele was strongly associated with asthma in an independent study of 600 asthmatic children and 1194 super-normal controls [odds ratio (OR) 6.3; 95% confidence interval (CI) 1.4-28.3, dominant model]. Differential binding of the two ND1+32656 alleles was observed to a protein from nuclei of the Calu 3 epithelial cell line. In an accompanying study, the deletion allele (ND1+32656*1) was found to be associated with inflammatory bowel disease. The results indicate that intracellular recognition of specific bacterial products affects the presence of childhood asthma.