Abstract Increased levels of the pro-inflammatory cytokines IL-1β and IL-6 are linked to severe COVID-19. Here, we investigate the contributions of viral host cells, primary human airway epithelia (HAE), and immune bystanders, peripheral blood mononuclear cells (PBMCs), in the production of these cytokines. Despite having functional inflammasomes and supporting viral replication, HAE do not secrete IL-1β upon SARS-CoV-2 infection. PBMCs do not support productive viral replication, but the SARS-CoV-2 envelope (E) protein primes inflammasomes through stimulation of TLR2. To activate inflammasomes in PBMCs, SARS-CoV-2-infected HAE provide a second signal in the form of damage-associated molecular patterns (DAMPs), which includes mitochondrial and genomic DNA. Co-culture of PBMCs with infected epithelial cells stimulates IL-1β release, while addition of benzonase, STING, or caspase-1 inhibitors, but not NLRP3 inhibitors, abrogates this response. In turn, IL-1β stimulates IL-6 secretion from both populations with a robust response from HAE. Thus, while infection in either cell type in isolation does not yield IL-1β or IL-6, immune bystander detection of SARS-CoV-2 infection in the epithelium stimulates both IL-1β and IL-6 production, amplifying pro-inflammatory cytokine production through cell-cell communication. This circuit is reflected in patient data, as COVID-19 autopsy lungs show hallmarks of inflammasome priming and activation in myeloid populations lacking SARS-CoV-2 antigens. Meta-analysis of single cell RNA sequencing (scRNAseq) data reveals discordant, exacerbated priming of inflammasomes in myeloid cells from severe but not mild COVID-19 patients, indicating this circuit is intensified in severe disease. Supported by grants from NIH R56 AI158314, R01 AI158314, AI029564, AI141333 and CA232109 to J.P.-Y.T; NCI T32CA071341 to K.C.B.; UH3 HL123645, R01 HL136961, P30 DK 065988, P01 HL108808, and from the Cystic Fibrosis Foundation (CFF) BOUCHE19R0 to T.A. and R.C.B; CFF grant BOUCHE19XX0 to R.C.B. and K.O.; CFF grant OKUDA20G0 KO; NC Policy Collaboratory, NIH R01AI157253, and U19 AI100625 to M. T. H.; NSF GRFP 2019255197 to J.F.L. T.A. is a Japan Society for the Promotion of Science Overseas Research Fellow. Y.X. is supported by NSF DMS-191290 and NSF IOS 2107215. Y.X and Y.L.L. are supported by NIH grants R01DE026728 and R01DE031951. Some BSL3 work was performed in the Duke Regional Biocontainment Laboratory (Duke RBL) which received partial support for construction from NIH/NIAID (UC6AI058607).