Inflammasomes are multi‐protein complexes that regulate the cleavage of cysteine protease caspase‐1, secretion of inflammatory cytokines, and induction of inflammatory cell death, pyroptosis. Several members of the nod‐like receptor family assemble inflammasome in response to specific ligands. An exception to this is the NLRP3 inflammasome which is activated by structurally diverse entities. Recent studies have suggested that NLRP3 might be a sensor of cellular homeostasis, and any perturbation in distinct metabolic pathways results in the activation of this inflammasome. Lipid metabolism is exceedingly important in maintaining cellular homeostasis, and it is recognized that cells and tissues undergo extensive lipid remodeling during activation and disease. Some lipids are involved in instigating chronic inflammatory diseases, and new studies have highlighted critical upstream roles for lipids, particularly cholesterol, in regulating inflammasome activation implying key functions for inflammasomes in diseases with defective lipid metabolism. The focus of this review is to highlight how lipids regulate inflammasome activation and how this leads to the progression of inflammatory diseases. The key roles of cholesterol metabolism in the activation of inflammasomes have been comprehensively discussed. Besides, the roles of oxysterols, fatty acids, phospholipids, and lipid second messengers are also summarized in the context of inflammasomes. The overriding theme is that lipid metabolism has numerous but complex functions in inflammasome activation. A detailed understanding of this area will help us develop therapeutic interventions for diseases where dysregulated lipid metabolism is the underlying cause.