ISG15 is strongly induced after type I IFN stimulation producing a protein comprised of two ubiquitin-like domains. Intracellularly, ISG15 can be covalently linked and modify the function of target proteins (ISGylation). In addition, free unconjugated ISG15 can be released from cells. We found that ISG15 is released in the serum of Toxoplasma gondii infected mice early after infection in a type-I IFN independent manner. Once in the extracellular space, free ISG15 forms dimers and enhances the release of key cytokines involved in the immune response to the parasite: IL-12, IFN-γ, and IL-1β. Its action is dependent on an actively invading and replicating live parasite. ISG15 induces an increase of IL-1β later during infection by leading to increased IL-1β producing CD8α+ dendritic cells at the site of infection. Here, we define for the first time the molecular determinants of active free ISG15 and link ISG15 to IL-1β production by CD8α+ dendritic cells. Thus we define ISG15 as a novel secreted modulator of the cytokine response during Toxoplasma infection.