Transcription factor NF-kappaB is regulated by a family of inhibitors, IkappaBs, as well as the NF-kappaB1 and NF-kappaB2 precursor proteins, p105 and p100. Although the different NF-kappaB inhibitors can all inhibit NF-kappaB in vitro, their physiological functions are incompletely understood. In this study, we demonstrate that p105 plays an important role in the regulation of T cell homeostasis and prevention of chronic inflammation. Mice lacking p105, but expressing the mature NF-kappaB1 p50, spontaneously develop intestinal inflammation with features of human inflammatory bowel disease. This inflammatory disorder occurs under specific pathogen-free conditions and critically involves T cells. Consistently, the p105-deficient mice have reduced frequency of naive T cells and increased frequency of memory/effector T cells in the peripheral lymphoid organs. Although p105 is dispensable for the production of immunosuppressive regulatory T cells, p105 deficiency renders CD4 T cells more resistant to Treg-mediated inhibition. We further show that the loss of p105 results in hyperproduction of Th17 subset of inflammatory T cells. Together, these findings suggest a critical role for NF-kappaB1 p105 in the regulation of T cell homeostasis and differentiation and the control of chronic inflammation.