Induction of NF-kappaB-dependent transcription requires phosphorylation and subsequent degradation of I-kappaB, an inhibitor of NF-kappaB, followed by nuclear translocation and DNA binding of NF-kappaB. Tumor necrosis factor receptor-associated factor 2 (TRAF2) plays a role in NF-kappaB activation in response to cytokines such as tumor necrosis factor alpha (TNFalpha). In this study, we purified and characterized a novel kinase (T2K, also known as TBK1 or NAK), which associates with TRAF2 and exhibits kinase activity towards I-kappaBalpha in vitro. The physiological function of T2K was investigated using T2K-deficient mice. Heterozygotes appear normal, but t2k(-/-) animals die at approximately E14.5 of massive liver degeneration and apoptosis. Never theless, hematopoietic progenitors from T2K-deficient fetal liver support normal lymphocyte development. Furthermore, t2k(-/-) embryonic fibroblasts and thymocytes do not display increased sensitivity to TNFalpha-induced apoptosis. In response to either TNFalpha or IL-1 induction, t2k(-/-) embryonic fibroblasts exhibit normal degradation of I-kappaB and kappaB-binding activity. However, NF-kappaB-directed transcription is dramatically reduced. These results demonstrate that, like I-kappaB kinase beta and the RelA subunit of NF-kappaB, T2K is critical in protecting embryonic liver from apoptosis. However, T2K has a unique role in the activation of NF-kappaB-directed transcription, apparently independent of I-kappaB degradation and NF-kappaB DNA binding.