Humans do not usually develop effective immunity to Staphylococcus aureus reinfection. Using a murine model that mimics human infection, we show that lack of protective immunity to S. aureus systemic reinfection is associated with robust interleukin-10 (IL-10) production and impaired protective Th17 responses. In dendritic cell co-culture assays, priming with S. aureus promotes robust T cell proliferation, but limits Th cells polarization and production of IL-1β and other cytokines important for Th1 and Th17 differentiation. We show that O-acetylation of peptidoglycan, a mechanism utilized by S. aureus to block bacterial cell wall breakdown, limits the induction of pro-inflammatory signals required for optimal Th17 polarization. IL-10 deficiency in mice restores protective immunity to S. aureus infection, and adjuvancy with a staphylococcal peptidoglycan O-acetyltransferase mutant reduces IL-10, increases IL-1β, and promotes development of IL-17-dependent, Th cell-transferable protective immunity. Overall, our study suggests a mechanism whereby S. aureus modulates cytokines critical for induction of protective Th17 immunity.