Cytosolic innate immune sensing is a cornerstone of innate immunity in mammalian cells and provides a surveillance system for invading pathogens and endogenous danger signals. The NAIP‐NLRC4 inflammasome responds to cytosolic flagellin, and the inner rod and needle proteins of the type 3 secretion system of bacteria. This complex induces caspase‐1‐dependent proteolytic cleavage of the proinflammatory cytokines IL‐1β and IL‐18, and the pore‐forming protein gasdermin D, leading to inflammation and pyroptosis, respectively. Localized responses triggered by the NAIP‐NLRC4 inflammasome are largely protective against bacterial pathogens, owing to several mechanisms, including the release of inflammatory mediators, liberation of concealed intracellular pathogens for killing by other immune mechanisms, activation of apoptotic caspases, caspase‐7, and caspase‐8, and expulsion of an entire infected cell from the mammalian host. In contrast, aberrant activation of the NAIP‐NLRC4 inflammasome caused by de novo gain‐of‐function mutations in the gene encoding NLRC4 can lead to macrophage activation syndrome, neonatal enterocolitis, fetal thrombotic vasculopathy, familial cold autoinflammatory syndrome, and even death. Some of these clinical manifestations could be treated by therapeutics targeting inflammasome‐associated cytokines. In addition, the NAIP‐NLRC4 inflammasome has been implicated in the pathogenesis of colorectal cancer, melanoma, glioma, and breast cancer. However, no consensus has been reached on its function in the development of any cancer types. In this review, we highlight the latest advances in the activation mechanisms and structural assembly of the NAIP‐NLRC4 inflammasome, and the functions of this inflammasome in different cell types. We also describe progress toward understanding the role of the NAIP‐NLRC4 inflammasome in infectious diseases, autoinflammatory diseases, and cancer.