The lymphotoxin-beta receptor (LTbetaR) activates the NF-kappaB2 transcription factors, p100 and RelB, by regulating the NF-kappaB-inducing kinase (NIK). Constitutive proteosomal degradation of NIK limits NF-kappaB activation in unstimulated cells by the ubiquitin:NIK E3 ligase comprised of subunits TNFR-associated factors (TRAF)3, TRAF2, and cellular inhibitor of apoptosis (cIAP). However, the mechanism releasing NIK from constitutive degradation remains unclear. We found that insertion of a charge-repulsion mutation in the receptor-binding crevice of TRAF3 ablated binding of both LTbetaR and NIK suggesting a common recognition site. A homologous mutation in TRAF2 inhibited cIAP interaction and blocked NIK degradation. Furthermore, the recruitment of TRAF3 and TRAF2 to the ligated LTbetaR competitively displaced NIK from TRAF3. Ligated LTbetaR complexed with TRAF3 and TRAF2 redirected the specificity of the ubiquitin ligase reaction to polyubiquitinate TRAF3 and TRAF2, leading to their proteosomal degradation. Stimulus-dependent degradation of TRAF3 required the RING domain of TRAF2, but not of TRAF3, implicating TRAF2 as a key E3 ligase in TRAF turnover. The combined action of competitive displacement of NIK and TRAF degradation halted NIK turnover, and promoted its association with IKKalpha and signal transmission. These results indicate the LTbetaR modifies the ubiquitin:NIK E3 ligase, and also acts as an allosteric regulator of the ubiquitin:TRAF E3 ligase.