RIPK2 mediates inflammatory signaling by the bacteria-sensing receptors NOD1 and NOD2. Kinase inhibitors targeting RIPK2 are a proposed strategy to ameliorate NOD-mediated pathologies. Here, we reveal that RIPK2 kinase activity is dispensable for NOD2 inflammatory signaling and show that RIPK2 inhibitors function instead by antagonizing XIAP-binding and XIAP-mediated ubiquitination of RIPK2. We map the XIAP binding site on RIPK2 to the loop between β2 and β3 of the N-lobe of the kinase, which is in close proximity to the ATP-binding pocket. Through characterization of a new series of ATP pocket-binding RIPK2 inhibitors, we identify the molecular features that determine their inhibition of both the RIPK2-XIAP interaction, and of cellular and in vivoNOD2 signaling. Our study exemplifies how targeting of the ATP-binding pocket in RIPK2 can be exploited to interfere with the RIPK2-XIAP interaction for modulation of NOD signaling.