The molecular mechanisms underlying Hodgkin's disease remain obscure, but it has been recognized that the neoplastic cells display high levels of constitutively active nuclear NF-kappaB. Here we demonstrate that although nuclear NF-kappaB is transcriptionally active, the Hodgkin cells fail to activate NF-kappaB dependent transcription in response to CD40 ligand. In three Hodgkin cell lines examined each had abnormalities in expression of IkappaBalpha which could account for the deregulated NF-kappaB. Although all three cell lines had greater than normal levels of IkappaBalpha mRNA no IkappaBalpha protein could be detected in the KM-H2 cells, while the L428 cell line contains a C-terminally truncated IkappaBalpha species that fails to associate with NF-kappaB. The HDLM-2 cell line contains a more slowly migrating form of IkappaBalpha that can associate with NF-kappaB, but increasing the level of this protein within the cell fails to inhibit nuclear NF-kappaB. Addition of recombinant IkappaBalpha to nuclear extracts from all three cell lines resulted in complete inhibition of NF-kappaB DNA binding activity and introduction of a plasmid expressing IkappaBalpha into the cells inhibited the transcriptional activity of an NF-kappaB dependent reporter plasmid. Thus the constitutive expression of NF-kappaB in Hodgkin cells is a direct consequence of the abnormal expression of IkappaBalpha rather than changes in NF-kappaB that render it refractory to inhibition by IkappaB proteins. These changes could, at least in part, account for the characteristic activated phenotype of Hodgkin cells and their pattern of cytokine secretion, which determine the pathological appearance and clinical manifestations of Hodgkin's disease.