Peptidoglycan (PGN) is a potent immune adjuvant derived from bacterial cell walls. Previous investigations suggest that intestinal epithelium may absorb PGN from the lumen. Nonetheless, how PGN is taken up and crosses intestinal epithelium remains largely unclear. Here, we first characterized PGN transport in vitro using IEC-18 and HT29-CL19A cells, which represent less mature epithelial cells in intestinal crypts. With fluorescent microscopy, we visualized internalization of dual-labeled PGN by enterocytes. Engulfed PGN was found to form a complex with PGN recognition protein-3, which may facilitate delivering PGN in vivo. Utilizing electronic microscopy, we revealed that uptake of apical PGN across intestinal epithelial monolayers was involved in phagocytosis, multivesicular body formation, and exosome secretion. We also studied transport of PGN using the transwell system. Our data indicated that apically loaded PGN was exocytosed to the basolateral compartment with exosomes by HT29-CL19A cells. The PGN-contained basolateral exosome extracts induced macrophage activation. Through gavaging mice with labeled PGN, we found that luminal PGN was taken up by columnar epithelial cells in crypts of the small intestine. Furthermore, we showed that pre-confluent immature but not post-confluent mature C2BBe1 cells engulfed PGN via a toll-like receptor 2-dependent manner. Together, our findings suggest that (1) crypt-based immature intestinal epithelial cells play an important role in transport of luminal PGN over the intestinal epithelium; and (2) luminal PGN is transcytosed across intestinal epithelia via a toll-like receptor 2-mediated phagocytosis-multivesicular body-exosome pathway. The absorbed PGN and its derivatives may facilitate maintenance of intestinal immune homeostasis.