Crohn's disease (CD) is a polygenic immune-mediated disease characterized by gastrointestinal inflammation. Mice deficient in the hematopoietic-restricted SH2 domain-containing inositolpolyphosphate 5'-phosphatase (SHIP) develop spontaneous CD-like ileal inflammation. Intriguingly, SHIP mRNA is not upregulated in biopsies from patients with ileal CD despite immune cell infiltration, but SHIP's role in human CD remains unknown. We analyzed SHIP mRNA expression and activity in biopsies and peripheral blood mononuclear cells (PBMCs) from control and treatment-naive subjects with ileal CD, and demonstrated that SHIP mRNA and activity were lower in hematopoietic cells in ileal biopsies and PBMCs from subjects with CD. In all tissues from our patient cohort and in PBMCs from a second healthy control cohort, subjects homozygous for the autophagy-related 16-like protein (ATG16L1) CD-associated gene variant (rs2241880), had low SHIP mRNA expression and activity. SHIP protein expression increased during autophagy and SHIP upregulation was dependent on ATG16L1 and/or autophagy, as well as the ATG16L1 CD-associated gene variant. Finally, homozygosity for the ATG16L1 risk variant and low SHIP mRNA expression is inversely related to increased (LPS+ATP)-induced IL-1β production by PBMCs in our cohorts and was regulated by increased transcription of ILIB. These data suggest a novel mechanism by which the ATG16L1 CD-associated gene variant may predispose people to develop intestinal inflammation.