Alu RNA accumulation due to DICER1 deficiency in the retinal pigmented epithelium (RPE) is implicated in geographic atrophy (GA), an advanced form of age-related macular degeneration that causes blindness in millions of individuals. The mechanism of Alu RNA-induced cytotoxicity is unknown. Here we show that DICER1 deficit or Alu RNA exposure activates the NLRP3 inflammasome and triggers TLR-independent MyD88 signaling via IL18 in the RPE. Genetic or pharmacological inhibition of inflammasome components (NLRP3, Pycard, Caspase-1), MyD88, or IL18 prevents RPE degeneration induced by DICER1 loss or Alu RNA exposure. These findings, coupled with our observation that human GA RPE contains elevated amounts of NLRP3, PYCARD, and IL18 and evidence of increased Caspase-1 and MyD88 activation, provide a rationale for targeting this pathway in GA. Our findings also reveal a function of the inflammasome outside the immune system and an immunomodulatory action of mobile elements.