Systems for protein degradation are essential for tight control of the inflammatory immune response. Autophagy, a bulk degradation system that delivers cytoplasmic constituents into autolysosomes, controls degradation of long-lived proteins, insoluble protein aggregates and invading microbes, and is suggested to be involved in the regulation of inflammation. However, the mechanism underlying the regulation of inflammatory response by autophagy is poorly understood. Here we show that Atg16L1 (autophagy-related 16-like 1), which is implicated in Crohn's disease, regulates endotoxin-induced inflammasome activation in mice. Atg16L1-deficiency disrupts the recruitment of the Atg12-Atg5 conjugate to the isolation membrane, resulting in a loss of microtubule-associated protein 1 light chain 3 (LC3) conjugation to phosphatidylethanolamine. Consequently, both autophagosome formation and degradation of long-lived proteins are severely impaired in Atg16L1-deficient cells. Following stimulation with lipopolysaccharide, a ligand for Toll-like receptor 4 (refs 8, 9), Atg16L1-deficient macrophages produce high amounts of the inflammatory cytokines IL-1beta and IL-18. In lipopolysaccharide-stimulated macrophages, Atg16L1-deficiency causes Toll/IL-1 receptor domain-containing adaptor inducing IFN-beta (TRIF)-dependent activation of caspase-1, leading to increased production of IL-1beta. Mice lacking Atg16L1 in haematopoietic cells are highly susceptible to dextran sulphate sodium-induced acute colitis, which is alleviated by injection of anti-IL-1beta and IL-18 antibodies, indicating the importance of Atg16L1 in the suppression of intestinal inflammation. These results demonstrate that Atg16L1 is an essential component of the autophagic machinery responsible for control of the endotoxin-induced inflammatory immune response.