Pattern recognition receptors link metabolite and bacteria-derived inflammation to insulin resistance during obesity. We demonstrate that NOD2 detection of bacterial cell wall peptidoglycan (PGN) regulates metabolic inflammation and insulin sensitivity. An obesity-promoting high-fat diet (HFD) increased NOD2 in hepatocytes and adipocytes, and NOD2(-/-) mice have increased adipose tissue and liver inflammation and exacerbated insulin resistance during a HFD. This effect is independent of altered adiposity or NOD2 in hematopoietic-derived immune cells. Instead, increased metabolic inflammation and insulin resistance in NOD2(-/-) mice is associated with increased commensal bacterial translocation from the gut into adipose tissue and liver. An intact PGN-NOD2 sensing system regulated gut mucosal bacterial colonization and a metabolic tissue dysbiosis that is a potential trigger for increased metabolic inflammation and insulin resistance. Gut dysbiosis in HFD-fed NOD2(-/-) mice is an independent and transmissible factor that contributes to metabolic inflammation and insulin resistance when transferred to WT, germ-free mice. These findings warrant scrutiny of bacterial component detection, dysbiosis, and protective immune responses in the links between inflammatory gut and metabolic diseases, including diabetes.