Transcriptional regulation of the interferon-beta (IFN-beta) gene is characterized by strict constitutive repression and virus-specific activation. Previous studies have shown that the IFN-beta promoter is constitutively repressed by a negative regulatory element (NRE). Isolated NRE acts as a constitutive and position-independent silencer on the NF-kappaB-binding sites. Here, we describe the identification and functional characterization of the NRE-binding protein, called NRF (NF-kappaB-repressing factor), which abolishes the transcriptional activity of the bordering NF-kappaB- binding sites by a distance-independent mechanism. Deletion studies show that a minimal repression domain of NRF is sufficient to exert its inhibitory effect. In vitro, NF-kappaB proteins bind to purified NRF by a direct protein-protein interaction. We demonstrate that NRF is a ubiquitous and constitutive nuclear protein. In fibroblasts, the expression of the NRF antisense RNA releases the endogenous IFN-beta gene transcription. Our data strongly suggest that the NRF-mediated inhibition of NF-kappaB is a critical component of the IFN-beta gene silencing prior to viral infection.