Although mitophagy is known to restrict NLRP3 inflammasome activation, the underlying regulatory mechanism remains poorly characterized. Here we describe a type of early endosome-dependent mitophagy that limits NLRP3 inflammasome activation. Deletion of the endosomal adaptor protein APPL1 impairs mitophagy, leading to accumulation of damaged mitochondria producing reactive oxygen species (ROS) and oxidized cytosolic mitochondrial DNA, which in turn trigger NLRP3 inflammasome overactivation in macrophages. NLRP3 agonist causes APPL1 to translocate from early endosomes to mitochondria, where it interacts with Rab5 to facilitate endosomal-mediated mitophagy. Mice deficient for APPL1 specifically in hematopoietic cell are more sensitive to endotoxin-induced sepsis, obesity-induced inflammation and glucose dysregulation. These are associated with increased expression of systemic interleukin-1β, a major product of NLRP3 inflammasome activation. Our findings indicate that the early endosomal machinery is essential to repress NLRP3 inflammasome hyperactivation by promoting mitophagy in macrophages.