The Nursery is the home of the Muppet Babies. It debuted in The Muppets Take Manhattan during Miss Piggy's dream sequence as an idealized world where the Muppets all knew each other as infants, and where little ones could use their Big Bird doll as a potential patient while playing doctor. Notable features of the well-lit nursery included Baby Rowlf's baby grand piano, a rocking horse, cribs, swing sets, and an assortment of play vehicles.

The nursery subsequently became the primary location during the Muppet Babies series, under the watchful eye of Nanny.