There is a striking association between human cholestatic liver disease (CLD) and inflammatory bowel disease. However, the functional implications for intestinal microbiota and inflammasome-mediated innate immune response in CLD remain elusive. Here we investigated the functional role of gut-liver crosstalk for CLD in the murine Mdr2 knockout model resembling human primary sclerosing cholangitis (PSC). Male , crossed with hepatocyte-specific deletion of caspase-8 ( /Casp8 ) and wild-type (WT) control mice were housed for 8 or 52 weeks, respectively, to characterise the impact of Mdr2 deletion on liver and gut including bile acid and microbiota profiling. To block caspase activation, a pan-caspase inhibitor (IDN-7314) was administered. Finally, the functional role of -associated intestinal dysbiosis was studied by microbiota transfer experiments. mice displayed an unfavourable intestinal microbiota signature and pronounced NLRP3 inflammasome activation within the gut-liver axis. Intestinal dysbiosis in mice prompted intestinal barrier dysfunction and increased bacterial translocation amplifying the hepatic NLRP3-mediated innate immune response. Transfer of microbiota into healthy WT control mice induced significant liver injury in recipient mice, highlighting the causal role of intestinal dysbiosis for disease progression. Strikingly, IDN-7314 dampened inflammasome activation, ameliorated liver injury, reversed serum bile acid profile and cholestasis-associated microbiota signature. MDR2-associated cholestasis triggers intestinal dysbiosis. In turn, translocation of endotoxin into the portal vein and subsequent NLRP3 inflammasome activation contribute to higher liver injury. This process does not essentially depend on caspase-8 in hepatocytes, but can be blocked by IDN-7314.