The antimicrobial defence of Drosophila relies largely on the challenge-induced synthesis of an array of potent antimicrobial peptides by the fat body. The defence against Gram-positive bacteria and natural fungal infections is mediated by the Toll signalling pathway, whereas defence against Gram-negative bacteria is dependent on the Immune deficiency (IMD) pathway. Loss-of-function mutations in either pathway reduce the resistance to corresponding infections. The link between microbial infections and activation of these two pathways has remained elusive. The Toll pathway is activated by Gram-positive bacteria through a circulating Peptidoglycan recognition protein (PGRP-SA). PGRPs appear to be highly conserved from insects to mammals, and the Drosophila genome contains 13 members. Here we report a mutation in a gene coding for a putative transmembrane protein, PGRP-LC, which reduces survival to Gram-negative sepsis but has no effect on the response to Gram-positive bacteria or natural fungal infections. By genetic epistasis, we demonstrate that PGRP-LC acts upstream of the imd gene. The data on PGRP-SA with respect to the response to Gram-positive infections, together with the present report, indicate that the PGRP family has a principal role in sensing microbial infections in Drosophila.