X-linked Inhibitor of Apoptosis (XIAP) is an essential ubiquitin ligase for pro-inflammatory signalling downstream of the nucleotide-binding oligomerization domain containing (NOD)-1 and -2 pattern recognition receptors. Mutations in XIAP cause X-linked lymphoproliferative syndrome type-2 (XLP2), an immunodeficiency associated with a potentially fatal deregulation of the immune system, whose aetiology is not well understood. Here, we identify the XIAP baculovirus IAP repeat (BIR)2 domain as a hotspot for missense mutations in XLP2. We demonstrate that XLP2-BIR2 mutations severely impair NOD1/2-dependent immune signalling in primary cells from XLP2 patients and in reconstituted XIAP-deficient cell lines. XLP2-BIR2 mutations abolish the XIAP-RIPK2 interaction resulting in impaired ubiquitylation of RIPK2 and recruitment of linear ubiquitin chain assembly complex (LUBAC) to the NOD2-complex. We show that the RIPK2 binding site in XIAP overlaps with the BIR2 IBM-binding pocket and find that a bivalent Smac mimetic compound (SMC) potently antagonises XIAP function downstream of NOD2 to limit signalling. These findings suggest that impaired immune signalling in response to NOD1/2 stimulation is a general defect in XLP2 and demonstrate that the XIAP BIR2-RIPK2 interaction may be targeted pharmacologically to modulate inflammatory signalling.