Peptidoglycan (PGN) is a major polymer in bacterial cell walls and may constrain gut functionality and lower intestinal efficiencies in livestock. Citral has been reported to exhibit antibacterial and anti-inflammatory biological activities, improving the gastrointestinal function of swine. However, the protective effect of citral against PGN-elicited cellular responses and possible underlying mechanisms are unknown. In this study, the porcine jejunal epithelial cell line (IPEC-J2) was challenged with PGN from Staphylococcus aureus (S. aureus) or Bacillus subtilis (B. subtilis) to explore PGN-induced inflammatory responses. Our data showed that the inflammatory response stimulated by PGN from harmful bacteria (S. aureus) was more potent than that from commensal bacteria (B. subtilis) in IPEC-J2 cells. Based on the inflammatory model by PGN from S. aureus, it was demonstrated that PGN could significantly induce inflammatory cytokine production and influence nutrient absorption and barrier function in a dose-dependent manner. However, the PGN-mediated immune responses were remarkably suppressed by citral. In addition, citral significantly attenuated the effect of PGN on the intestine nutrient absorption and barrier function. The expression of TLR2 was strongly induced by PGN stimulation, which was suppressed by citral. All data nominated that citral downregulated PGN-induced inflammation via TLR2-mediated activation of the NF-κB signaling pathway in IPEC-J2 cells. Furthermore, the results also indicate that the PGN degradation through the inclusion of enzymes (e.g., muramidase) as well as the inclusion of citral for attenuating inflammation may improve pig gut health and functionality.