In addition to its role in innate immunity, the intracellular pathogen sensor nucleotide-binding oligomerization domain 2 (NOD2) has been implicated in various inflammatory disorders, including the development of acute arthritis. However, the molecular mechanisms involved in the development of NOD2-responsive acute arthritis are not clear. In this study, we demonstrate that NOD2 signals to a cellular protein, Ly6/PLAUR domain-containing protein 6, in a receptor-interacting protein kinase 2-TGF-β-activated kinase 1-independent manner to activate the WNT signaling cascade. Gain- or loss-of-function of the WNT signaling pathway in an in vivo experimental mouse arthritis model or in vitro systems established the role for WNT-responsive X-linked inhibitor of apoptosis during the development of acute arthritis. Importantly, WNT-stimulated X-linked inhibitor of apoptosis mediates the activation of inflammasomes. The subsequent caspase-1 activation and IL-1β secretion together contribute to the phenotypic character of the inflammatory condition of acute arthritis. Thus, identification of a role for WNT-mediated inflammasome activation during NOD2 stimulation serves as a paradigm to understand NOD2-associated inflammatory disorders and develop novel therapeutics.