Participates in the innate immune response to microbial agents. Specifically recognizes diacylated and triacylated lipopeptides. Cooperates with TLR2 to mediate the innate immune response to bacterial lipoproteins or lipopeptides. Forms the activation cluster TLR2:TLR1:CD14 in response to triacylated lipopeptides, this cluster triggers signaling from the cell surface and subsequently is targeted to the Golgi in a lipid-raft dependent pathway. Acts via MYD88 and TRAF6, leading to NF-kappa-B activation, cytokine secretion and the inflammatory response.