Muramyl dipeptide, an essential structure for the diverse biologic activities of bacterial cell wall peptidoglycan, inhibited the synthesis of glycosaminoglycan/proteoglycan in cultured rabbit costal chondrocytes in a dose-dependent manner. Muramyl dipeptide, as well as lipopolysaccharide and interleukin-1 alpha, also enhanced the release of 35S-sulfate-prelabeled glycosaminoglycan/proteoglycan from the cell layer, which seems to reflect, at least partially, the increasing degradation of glycosaminoglycan/proteoglycan. Five synthetic analogs of muramyl dipeptide known to be adjuvant active or adjuvant inactive were tested for their potential to inhibit synthesis of glycosaminoglycan/proteoglycan and to enhance the release of glycosaminoglycan/proteoglycan in chondrocytes. The structural dependence of these synthetic analogs on chondrocytes was found to parallel that of immunoadjuvant activity. These results suggest that muramyl dipeptide is a potent mediator of catabolism in chondrocytes.