Tumor necrosis factor (TNF) mediates a variety of biological activities including cell proliferation, differentiation and programmed cell death. The specific response to TNF depends upon cell type and reflects the presence of specific regulatory proteins that participate in the TNF response pathway. TNF signal transduction is mediated by TRAF2 which binds the TNF Receptor2 (TNFR2) and activates NFkappaB. We previously identified a gene Pw1, which encodes a large zinc-finger containing protein. We have determined that Pw1 is identical to Peg3, a paternally expressed gene of unknown function (and will therefore be referred to as Peg3 throughout this text). We report here that Peg3 associates specifically with TRAF2 but not with other TRAF family members. Peg3 expression activates NFkappaB via IkappaB-NFkappaB dissociation and acts synergistically with TRAF2. Transfection of a truncated Peg3 containing the TRAF2 interaction site, abolishes NFkappaB activation by TRAF2 and/or TNF. We conclude that Peg3 is a regulator of the TNF response. These data reveal the involvement of an imprinted gene in this pathway.