Group B streptococcus (GBS) is the most important cause of neonatal sepsis, which is mediated in part by TLR2. However, GBS components that potently induce cytokines via TLR2 are largely unknown. We found that GBS strains of the same serotype differ in released factors that activate TLR2. Several lines of genetic and biochemical evidence indicated that lipoteichoic acid (LTA), the most widely studied TLR2 agonist in Gram-positive bacteria, was not essential for TLR2 activation. We thus examined the role of GBS lipoproteins in this process by inactivating two genes essential for bacterial lipoprotein (BLP) maturation: the prolipoprotein diacylglyceryl transferase gene (lgt) and the lipoprotein signal peptidase gene (lsp). We found that Lgt modification of the N-terminal sequence called lipobox was not critical for Lsp cleavage of BLPs. In the absence of lgt and lsp, lipoprotein signal peptides were processed by the type I signal peptidase. Importantly, both the Deltalgt and the Deltalsp mutant were impaired in TLR2 activation. In contrast to released factors, fixed Deltalgt and Deltalsp GBS cells exhibited normal inflammatory activity indicating that extracellular toxins and cell wall components activate phagocytes through independent pathways. In addition, the Deltalgt mutant exhibited increased lethality in a model of neonatal GBS sepsis. Notably, LTA comprised little, if any, inflammatory potency when extracted from Deltalgt GBS. In conclusion, mature BLPs, and not LTA, are the major TLR2 activating factors from GBS and significantly contribute to GBS sepsis.