Inactivation of the TNFAIP3 gene, encoding the A20 protein, is associated with critical inflammatory diseases including multiple sclerosis, rheumatoid arthritis and Crohn's disease. However, the role of A20 in attenuating inflammatory signalling is unclear owing to paradoxical in vitro and in vivo findings. Here we utilize genetically engineered mice bearing mutations in the A20 ovarian tumour (OTU)-type deubiquitinase domain or in the zinc finger-4 (ZnF4) ubiquitin-binding motif to investigate these discrepancies. We find that phosphorylation of A20 promotes cleavage of Lys63-linked polyubiquitin chains by the OTU domain and enhances ZnF4-mediated substrate ubiquitination. Additionally, levels of linear ubiquitination dictate whether A20-deficient cells die in response to tumour necrosis factor. Mechanistically, linear ubiquitin chains preserve the architecture of the TNFR1 signalling complex by blocking A20-mediated disassembly of Lys63-linked polyubiquitin scaffolds. Collectively, our studies reveal molecular mechanisms whereby A20 deubiquitinase activity and ubiquitin binding, linear ubiquitination, and cellular kinases cooperate to regulate inflammation and cell death.