Activation of NF-kappaB requires two highly related kinases named IKKalpha and IKKbeta that share identity in the nature and positioning of their structural domains. Despite their similarity, the kinases are functionally divergent, and we therefore sought to identify any structural features specific for IKKalpha or IKKbeta. We performed bioinformatics analysis, and we identified a region resembling a ubiquitin-like domain (UBL) that exists only in IKKbeta and that we named the UBL-like domain (ULD). Deletion of the ULD rendered IKKbeta catalytically inactive and unable to induce NF-kappaB activity, and overexpression of only the ULD dose-dependently inhibited tumor necrosis factor-alpha-induced NF-kappaB activity. The ULD could not be functionally replaced within IKKbeta by ubiquitin or the corresponding region of IKKalpha, whereas deletion of the equivalent section of IKKalpha did not affect its catalytic activity against IkappaBalpha or its activation by NF-kappaB-inducing kinase. We identified five residues conserved among the larger family of UBL-containing proteins and IKKbeta, and alanine scanning revealed that the leucine at position 353 (Leu(353)) is absolutely critical for IKKbeta-induced NF-kappaB activation. Most intriguingly, the L353A mutant was catalytically active but, unlike wild-type IKKbeta, formed a stable complex with the NF-kappaB p65 subunit. Our findings therefore establish the ULD as a critical functional domain specific for IKKbeta that might play a role in dissociating IKKbeta from p65.