During hemolysis, macrophages in the liver phagocytose damaged erythrocytes to prevent the toxic effects of cell-free hemoglobin and heme. It remains unclear how this homeostatic process modulates phagocyte functions in inflammatory diseases. Using a genetic mouse model of spherocytosis and single-cell RNA sequencing, we found that erythrophagocytosis skewed liver macrophages into a unique anti-inflammatory phenotype that we defined as Marcohigh/Hmoxhigh/MHC-class IIlow erythrophagocytes. This phenotype transformation profoundly mitigated disease expression in a model of an anti-CD40-induced hyperinflammatory syndrome with necrotic hepatitis and in a non-alcoholic steatohepatitis model, representing two macrophage-driven sterile inflammatory diseases. We reproduced the anti-inflammatory erythrophagocyte transformation in vitro by heme-exposure of mouse and human macrophages, yielding a distinctive transcriptional signature that segregated heme-polarized from M1- and M2-polarized cells. Mapping transposase-accessible chromatin in single cells by sequencing (scATAC-seq) defined the transcription factor NFE2L2/NRF2 as a critical driver of erythrophagocytes, and Nfe2l2/Nrf2-deficiency restored heme-suppressed inflammation. Our findings point to a pathway that regulates macrophage functions to link erythrocyte homeostasis with innate immunity.