The transcription factor NF-kappaB is sequestered in the cytoplasm in a complex with IkappaB. Almost all NF-kappaB activation pathways converge on IkappaB kinase (IKK), which phosphorylates IkappaB resulting in Lys 48-linked polyubiquitination of IkappaB and its degradation. This allows migration of NF-kappaB to the nucleus where it regulates gene expression. IKK has two catalytic subunits, IKKalpha and IKKbeta, and a regulatory subunit, IKKgamma or NEMO. NEMO is essential for NF-kappaB activation, and NEMO dysfunction in humans is the cause of incontinentia pigmenti and hypohidrotic ectodermal dysplasia and immunodeficiency (HED-ID). The recruitment of IKK to occupied cytokine receptors, and its subsequent activation, are dependent on the attachment of Lys 63-linked polyubiquitin chains to signalling intermediates such as receptor-interacting protein (RIP). Here, we show that NEMO binds to Lys 63- but not Lys 48-linked polyubiquitin, and that single point mutations in NEMO that prevent binding to Lys 63-linked polyubiquitin also abrogates the binding of NEMO to RIP in tumour necrosis factor (TNF)-alpha-stimulated cells, the recruitment of IKK to TNF receptor (TNF-R) 1, and the activation of IKK and NF-kappaB. RIP is also destabilized in the absence of NEMO binding and undergoes proteasomal degradation in TNF-alpha-treated cells. These results provide a mechanism for NEMO's critical role in IKK activation, and a key to understanding the link between cytokine-receptor proximal signalling and IKK and NF-kappaB activation.