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Abstract Herein, we report the first identification of biallelic‐inherited mutations in ALPI as a Mendelian cause of inflammatory bowel disease in two unrelated patients. ALPI encodes for intestinal phosphatase alkaline, a brush border metalloenzyme that hydrolyses phosphate from the lipid A moiety of lipopolysaccharides and thereby drastically reduces Toll‐like receptor 4 agonist activity. Prediction tools and structural modelling indicate that all mutations affect critical residues or inter‐subunit interactions, and heterologous expression in HEK293T cells demonstrated that all ALPI mutations were loss of function. ALPI mutations impaired either stability or catalytic activity of ALPI and rendered it unable to detoxify lipopolysaccharide‐dependent signalling. Furthermore, ALPI expression was reduced in patients’ biopsies, and ALPI activity was undetectable in ALPI‐deficient patient's stool. Our findings highlight the crucial role of ALPI in regulating host–microbiota interactions and restraining host inflammatory responses. These results indicate that ALPI mutations should be included in screening for monogenic causes of inflammatory bowel diseases and lay the groundwork for ALPI‐based treatments in intestinal inflammatory disorders.