Phagocytosed Borrelia burgdorferi (Bb), the Lyme disease spirochete, induces a robust and complex innate immune response in human monocytes, in which TLR8 cooperates with TLR2 in the induction of NF-κB-mediated cytokine production, whereas TLR8 is solely responsible for transcription of IFN-β through IRF7. We now establish the role of Bb RNA in TLR8-mediated induction of IFN-β. First, using TLR2-transfected HEK.293 cells, which were unable to phagocytose intact Bb, we observed TLR2 activation by lipoprotein-rich borrelial lysates and TLR2 synthetic ligands but not in response to live spirochetes. Purified Bb RNA, but not borrelial DNA, triggered TLR8 activation. Neither of these 2 ligands induced activation of TLR7. Using purified human monocytes we then show that phagocytosed live Bb, as well as equivalent amounts of borrelial RNA delivered into the phagosome by polyethylenimine (PEI), induces transcription of IFN-β and secretion of TNF-α. The cytokine response to purified Bb RNA was markedly impaired in human monocytes naturally deficient in IRAK-4 and in cells with knockdown TLR8 expression by small interfering RNA. Using confocal microscopy we provide evidence that TLR8 colocalizes with internalized Bb RNA in both early (EEA1) and late endosomes (LAMP1). Live bacterial RNA staining indicates that spirochetal RNA does not transfer from the phagosome into the cytosol. Using fluorescent dextran particles we show that phagosomal integrity in Bb-infected monocytes is not affected. We demonstrate, for the first time, that Bb RNA is a TLR8 ligand in human monocytes and that transcription of IFN-β in response to the spirochete is induced from within the phagosomal vacuole through the TLR8-MyD88 pathway.