Alterations in splicing patterns of genes contribute to the regulation of gene function by generating endogenous inhibitor or activator molecules. Nucleotide-binding and oligomerization domain (NOD) 2 is an intracellular receptor for bacterial cell wall components and plays an important role in initiating immune responses against cytoinvasive pathogens. NOD2 overexpression sensitizes intestinal epithelial cells toward bacterial cell wall components, activates the proinflammatory transcription factor NF-kappaB, and induces the subsequent release of the chemotactic cytokine IL-8. Here, we have assessed the regulation and function of a transcript isoform of NOD2, NOD2-S, generated by the skipping of the third exon, which encodes for a protein that is truncated within the second caspase recruitment (CARD) domain. NOD2-S is preferentially expressed in the human colon and is up-regulated by the antiinflammatory cytokine IL-10. Overexpression of NOD2-S down-regulates NOD2-induced NF-kappaB activation and IL-8 release. Moreover, NOD2-S also interferes with the maturation and secretion of pro-IL-1beta downstream of NOD2 and its adaptor molecule receptor-interacting protein kinase 2. We provide a molecular basis for these effects, as we show that NOD2-S interacts with both, NOD2 and receptor-interacting protein kinase 2 and inhibits the "nodosome" assembly by interfering with the oligomerization of NOD2. These data unveil another level of complexicity in the regulation of intracellular innate immunity and may have important implications for the molecular understanding of NOD/NALP protein-driven disease pathophysiology.