The endogenous metabolite itaconate has recently emerged as a regulator of macrophage function, but its precise mechanism of action remains poorly understood(1-3). Here we show that itaconate is required for the activation of the anti-inflammatory transcription factor Nrf2 (also known as NFE2L2) by lipopolysaccharide in mouse and human macrophages. We find that itaconate directly modifies proteins via alkylation of cysteine residues. Itaconate alkylates cysteine residues 151, 257, 288, 273 and 297 on the protein KEAP1, enabling Nrf2 to increase the expression of downstream genes with anti-oxidant and anti-inflammatory capacities. The activation of Nrf2 is required for the anti-inflammatory action of itaconate. We describe the use of a new cell-permeable itaconate derivative, 4-octyl itaconate, which is protective against lipopolysaccharide-induced lethality in vivo and decreases cytokine production. We show that type I interferons boost the expression of Irg1 (also known as Acod1) and itaconate production. Furthermore, we find that itaconate production limits the type I interferon response, indicating a negative feedback loop that involves interferons and itaconate. Our findings demonstrate that itaconate is a crucial anti-inflammatory metabolite that acts via Nrf2 to limit inflammation and modulate type I interferons.