TNFα and IL-1β are two proinflammatory cytokines that play critical roles in many diseases, including rheumatoid arthritis and infectious diseases. How TNFα- and IL-1β-mediated signaling is finely tuned is not fully elucidated. Here, we identify tripartite-motif protein 38 (TRIM38) as a critical negative regulator of TNFα- and IL-1β-triggered signaling. Overexpression of TRIM38 inhibited activation of NF-κB and induction of downstream cytokines following TNFα and IL-1β stimulation, whereas knockdown or knockout of TRIM38 had the opposite effects. TRIM38 constitutively interacted with critical components TGF-β-activated kinase 1 (TAK1)-binding protein 2/3 (TAB2/3) and promoted lysosome-dependent degradation of TAB2/3 independent of its E3 ubiquitin ligase activity. Consistently, deficiency of TRIM38 resulted in abolished translocation of TAB2 to the lysosome, increased level of TAB2 in cells, and enhanced activation of TAK1 after TNFα and IL-1β stimulation. We conclude that TRIM38 negatively regulates TNFα- and IL-1β-induced signaling by mediating lysosome-dependent degradation of TAB2/3, two critical components in TNFα- and IL-1β-induced signaling pathways. Our findings reveal a previously undiscovered mechanism by which cells keep the inflammatory response in check to avoid excessive harmful immune response triggered by TNFα and IL-1β.