Lyme disease is a multisystem disorder caused by the spirochete Borrelia burgdorferi. A common late-stage complication of this disease is oligoarticular arthritis, often involving the knee. In ∼10% of cases, arthritis persists after appropriate antibiotic treatment, leading to a proliferative synovitis typical of chronic inflammatory arthritides. Here, we provide evidence that peptidoglycan (PG), a major component of the B. burgdorferi cell envelope, may contribute to the development and persistence of Lyme arthritis (LA). We show that B. burgdorferi has a chemically atypical PG (PGBb) that is not recycled during cell-wall turnover. Instead, this pathogen sheds PGBb fragments into its environment during growth. Patients with LA mount a specific immunoglobulin G response against PGBb, which is significantly higher in the synovial fluid than in the serum of the same patient. We also detect PGBb in 94% of synovial fluid samples (32 of 34) from patients with LA, many of whom had undergone oral and intravenous antibiotic treatment. These same synovial fluid samples contain proinflammatory cytokines, similar to those produced by human peripheral blood mononuclear cells stimulated with PGBb. In addition, systemic administration of PGBb in BALB/c mice elicits acute arthritis. Altogether, our study identifies PGBb as a likely contributor to inflammatory responses in LA. Persistence of this antigen in the joint may contribute to synovitis after antibiotics eradicate the pathogen. Furthermore, our finding that B. burgdorferi sheds immunogenic PGBb fragments during growth suggests a potential role for PGBb in the immunopathogenesis of other Lyme disease manifestations.