Chronic inflammation has been strongly associated with tumor progression, but the underlying mechanisms remain elusive. Here we demonstrate that E3 ligase Itch and deubiquitinase Cyld formed a complex via interaction through 'WW-PPXY' motifs. The Itch-Cyld complex sequentially cleaved Lys63-linked ubiquitin chains and catalyzed Lys48-linked ubiquitination on the kinase Tak1 to terminate inflammatory signaling via tumor necrosis factor. Reconstitution of wild-type Cyld but not the mutant Cyld(Y485A), which cannot associate with Itch, blocked sustained Tak1 activation and proinflammatory cytokine production by Cyld(-/-) bone marrow-derived macrophages. Deficiency in Itch or Cyld led to chronic production of tumor-promoting cytokines by tumor-associated macrophages and aggressive growth of lung carcinoma. Thus, we have identified an Itch-Cyld-mediated regulatory mechanism in innate inflammatory cells.