Despite the initial success of some drugs and vaccines targeting COVID-19, understanding the mechanism underlying SARS-CoV-2 disease pathogenesis remains crucial for the development of further approaches to treatment. Some patients with severe Covid-19 experience a cytokine storm and display evidence of inflammasome activation leading to increased levels of IL-1β and IL-18; however, other reports have suggested reduced inflammatory responses to Sars-Cov-2. In this study we have examined the effects of the Sars-Cov-2 envelope (E) protein, a virulence factor in coronaviruses, on inflammasome activation and pulmonary inflammation. In cultured macrophages the E protein suppressed inflammasome priming and NLRP3 inflammasome activation. Similarly, in mice transfected with E protein and treated with poly(I:C) to simulate the effects of viral RNA, the E protein, in an NLRP3-dependent fashion, reduced expression of pro-IL-1β, levels of IL-1β and IL-18 in broncho-alveolar lavage fluid, and macrophage infiltration in the lung. To simulate the effects of more advanced infection, macrophages were treated with both LPS and poly(I:C). In this setting the E protein increased NLRP3 inflammasome activation in both murine and human macrophages. Thus, the Sars-Cov-2 E protein may initially suppress the host NLRP3 inflammasome response to viral RNA while potentially increasing NLRP3 inflammasome responses in the later stages of infection. Targeting the Sars-Cov-2 E protein especially in the early stages of infection may represent a novel approach to Covid-19 therapy.