The NF-kappaB family of transcription factors is activated in response to many stimuli, including pro-inflammatory cytokines, environmental stresses and, in the case of B and T lymphocytes, by antigenic stimulation. Bcl10 is essential for NF-kappaB activation by T- and B-cell receptors. T and B lymphocytes from Bcl10-deficient mice fail to activate NF-kappaB in response to antigen-receptor stimulation and, as a consequence, are unable to proliferate. Bcl10 overexpression is sufficient to activate NF-kappaB, a process that requires the NF-kappaB essential modulator NEMO (also known as IKK-gamma), which is the regulatory subunit of the IkappaB kinase complex. However, the cellular mechanism by which Bcl10 activates the NF-kappaB pathway remains unclear. Here we show that Bcl10 targets NEMO for lysine-63-linked ubiquitination. Notably, a mutant form of NEMO that cannot be ubiquitinated inhibited Bcl10-induced NF-kappaB activation. Paracaspase and a ubiquitin-conjugating enzyme (UBC13) were both required for Bcl10-induced NEMO ubiquitination and subsequent NF-kappaB activation. Furthermore, short interfering RNAs that reduced the expression of paracaspase and UBC13 abrogated the effects of Bcl10. Thus, the adaptor protein Bcl10 promotes activation of NF-kappaB transcription factors through paracaspase- and UBC13-dependent ubiquitination of NEMO.