The NF-kappa B transcription factor has been implicated in the inducible expression of many genes, including inflammatory, immune, and acute-phase response genes. NF-kappa B consists of two subunits, 50K and 65K polypeptides. The genes encoding p50 and p65 have sequence similarities with the c-rel proto-oncogene and the Drosophila maternal effect gene dorsal. We describe the cloning and characterization of a novel rel-related gene encoding a 98K product that shares extensive homology with the p105 precursor of the NF-kappa B p50 protein, containing both a Rel homology and SWI6/ankyrin repeat domain. We demonstrate that p98 is proteolytically processed in vivo to generate a 55K polypeptide, which binds to kappa B sites. p55 is capable of forming heterocomplexes with other Rel/NF-kappa B family members, which can bind to kappa B motifs in vitro, and stimulate transcription of reporter genes containing these cis-elements in vivo. The identification of a homolog for NF-kappa B p50/p105, termed p55/p98, gives further support to the idea that NF-kappa B is a collection of structurally related complexes of which contribute to the pleiotropic regulatory processes originally assigned to NF-kappa B.