The activation of pro-inflammatory gene programs by nuclear factor-kappaB (NF-kappaB) is primarily regulated through cytoplasmic sequestration of NF-kappaB by the inhibitor of kappaB (IkappaB) family of proteins. IkappaBbeta, a major isoform of IkappaB, can sequester NF-kappaB in the cytoplasm, although its biological role remains unclear. Although cells lacking IkappaBbeta have been reported, in vivo studies have been limited and suggested redundancy between IkappaBalpha and IkappaBbeta. Like IkappaBalpha, IkappaBbeta is also inducibly degraded; however, upon stimulation by lipopolysaccharide (LPS), it is degraded slowly and re-synthesized as a hypophosphorylated form that can be detected in the nucleus. The crystal structure of IkappaBbeta bound to p65 suggested this complex might bind DNA. In vitro, hypophosphorylated IkappaBbeta can bind DNA with p65 and c-Rel, and the DNA-bound NF-kappaB:IkappaBbeta complexes are resistant to IkappaBalpha, suggesting hypophosphorylated, nuclear IkappaBbeta may prolong the expression of certain genes. Here we report that in vivo IkappaBbeta serves both to inhibit and facilitate the inflammatory response. IkappaBbeta degradation releases NF-kappaB dimers which upregulate pro-inflammatory target genes such as tumour necrosis factor-alpha (TNF-alpha). Surprisingly, absence of IkappaBbeta results in a dramatic reduction of TNF-alpha in response to LPS even though activation of NF-kappaB is normal. The inhibition of TNF-alpha messenger RNA (mRNA) expression correlates with the absence of nuclear, hypophosphorylated-IkappaBbeta bound to p65:c-Rel heterodimers at a specific kappaB site on the TNF-alpha promoter. Therefore IkappaBbeta acts through p65:c-Rel dimers to maintain prolonged expression of TNF-alpha. As a result, IkappaBbeta(-/-) mice are resistant to LPS-induced septic shock and collagen-induced arthritis. Blocking IkappaBbeta might be a promising new strategy for selectively inhibiting the chronic phase of TNF-alpha production during the inflammatory response.