Community Acquired Methicillin Resistant Staphylococcus aureus (CA-MRSA) causes severe necrotizing infections of the skin, soft tissues, and lungs. Staphylococcal α-hemolysin is an essential virulence factor in mouse models of CA-MRSA necrotizing pneumonia. S. aureus α-hemolysin has long been known to induce inflammatory signaling and cell death in host organisms, however the mechanism underlying these signaling events were not well understood. Using highly purified recombinant α-hemolysin, we now demonstrate that α-hemolysin activates the Nucleotide-binding domain and leucine-rich repeat containing gene family, pyrin domain containing 3 protein (NLRP3)-inflammasome, a host inflammatory signaling complex involved in responses to pathogens and endogenous danger signals. Non-cytolytic mutant α-hemolysin molecules fail to elicit NLRP3-inflammasome signaling, demonstrating that the responses are not due to non-specific activation of this innate immune signaling system by bacterially derived proteins. In monocyte-derived cells from humans and mice, inflammasome assembly in response to α-hemolysin results in activation of the cysteine proteinase, caspase-1. We also show that inflammasome activation by α-hemolysin works in conjunction with signaling by other CA-MRSA-derived Pathogen Associated Molecular Patterns (PAMPs) to induce secretion of pro-inflammatory cytokines IL-1β and IL-18. Additionally, α-hemolysin induces cell death in these cells through an NLRP3-dependent program of cellular necrosis, resulting in the release of endogenous pro-inflammatory molecules, like the chromatin-associated protein, High-mobility group box 1 (HMGB1). These studies link the activity of a major S. aureus virulence factor to a specific host signaling pathway. The cellular events linked to inflammasome activity have clear relevance to the disease processes associated with CA-MRSA including tissue necrosis and inflammation.