Like bacterial lipopolysaccharides (endotoxins), synthetic muramyl peptides (MPs) are thought to exert many of their biological effects by inducing the production of various mediators from host cells. Both synthetic muramyl dipeptide (MDP) and naturally occurring sleep factor (SF), which contains an MP structure, stimulate human monocytes to produce interleukin 1 (IL 1). IL 1 is a family of unique polypeptides that mediate a variety of host defense functions and possess several biological properties, many of which are shared with MPs. Endotoxins are potent inducers of IL 1, but polymyxin B, which blocks endotoxin's biological activities, has no effect on MP-induced IL 1 production. SF purified from human urine and SF isolated from the peritoneal fluid of patients undergoing chronic ambulatory peritoneal dialysis (CAPD) induce IL 1 when incubated with human mononuclear cells in vitro. SF from urine or CAPD fluid induces IL 1 production in the picrogram per milliliter range whereas synthetic MDP requires microgram per milliliter concentrations. Thus, both synthetic and naturally occurring MPs exert their biological effects, in part, by inducing IL 1.