IL-1β produced by phagocytes is important for protection against the mucosal pathogen Staphylococcus aureus. Processing and maturation of this cytokine requires activation of the multiprotein inflammasome complex. We observed that the bacterial cell wall component peptidoglycan (PGN) must be particulate and internalized via phagocytosis to activate NLRP3 inflammasomes and IL-1β secretion. In the context of S. aureus infection of macrophages, we find that phagocytosis and lysozyme-based bacterial cell wall degradation are necessary to induce IL-1β secretion. Further, an S. aureus enzyme, PGN O-acetyltransferase A, previously demonstrated to make cell wall PGN resistant to lysozyme, strongly suppresses inflammasome activation and inflammation in vitro and in vivo. These observations demonstrate that phagocytosis and lysozyme-based cell wall degradation of S. aureus are functionally coupled to inflammasome activation and IL-1β secretion and illustrate a case whereby a bacterium specifically subverts IL-1β secretion through chemical modification of its cell wall PGN.