Certain peptidoglycans (muramyl peptides), components of bacterial cell walls, and the monoaminergic neurotransmitter serotonin, profoundly modulate some activities of mammalian immune and nervous systems. We previously described the interaction of these compounds at receptors on macrophages. This report concerns specific binding sites for muramyl peptide in preparations of brain tissue, interaction between muramyl peptide and serotonin in binding to glial-derived cells, and the ability of both muramyl peptide and serotonin to induce release of interleukin-1-like activity from these cells. Specific binding sites for muramyl peptides in the low-nanomolar concentration range were found on subcellular fractions of fresh rat brain preparations, e.g., from diencephalon, and C6 glioma cells. This binding was saturable, reversible, stereospecific, and varied with brain region. In addition, muramyl peptide blocked the specific component of serotonin binding to glioma cells, while leaving the nonspecific binding component unaffected. Interleukin-1 has previously been shown to be released by macrophages in response to muramyl peptide. We found that low-nanomolar concentrations of either muramyl peptide or serotonin rapidly induced release of interleukin-1-like activity from a glial cell line. Thus, the pyrogenic and sleep-promoting effects of muramyl peptide may be mediated at least in part by release of interleukin-1 in the brain that follows binding to muramyl peptide/serotonin receptors on glial cells.