Genes encoding proteins with PYRIN/PAAD/DAPIN domains, a nucleotide binding fold (NACHT), and leucine rich repeats have recently been recognized as important mediators in autoimmune inflammatory disorders. Here we characterize the expression and function of a member of the PYRIN and NACHT domain (PAN) family, PAN1 (also known as NALP2 and PYPAF2). PAN1 protein expression is regulated by lipopolysaccharide (LPS) and interferons (IFNbeta and IFNgamma) in THP-1 macrophage cells. In gene transfection studies PAN1 manifests an inhibitory influence on NF-kappaB activation induced by various pro-inflammatory stimuli, including tumor necrosis factor TNFalpha and interleukin-1beta (IL-1beta). Gene transfer-mediated elevations in PAN1 protein also suppressed activation of IkappaB kinases induced by inflammatory cytokines. Conversely, reducing endogenous levels of PAN1 using small interfering RNA enhanced LPS-induced production of ICAM-1 (intercellular adhesion molecule 1), an NF-kappaB-dependent gene. We also show here that PAN1 binds via its PYRIN domain to ASC, an adapter protein involved in caspase-1 activation. This binding is disrupted by mutation of the alpha1 helix of ASC. In gene transfer experiments PAN1 enhances caspase-1 activation and IL-1beta secretion in collaboration with ASC. Conversely, reducing endogenous levels of PAN1 using small interfering RNA significantly reduced LPS-induced secretion of IL-1beta in monocytes. We propose that PAN1 functions as a modulator of the activation of NF-kappaB and pro-caspase-1 in macrophages.