IKKgamma is a component of the IKK complex, which regulates NF-kappaB activity. To investigate the role of IKKgamma, we expressed wild type IKKgamma containing 412 amino acids, and deletion mutants containing residues 1-312 and 101-412, using murine IKKgamma cDNA. In a co-transfection assay with a CAT reporter plasmid, NIK activated NF-kappaB-dependent gene expression approximately two fold and this expression was inhibited by co-transfection of a wild type IKKgamma expression plasmid. In binding assays IKKgamma inhibited the association of IkappaBalpha with IKKbeta and the subsequent phosphorylation of IkappaBalpha that is activated by NIK. Inhibition by IKKgamma also occurred in an assay with a dominant negative mutant of NIK but not with a C-terminal deletion mutant of IKKgamma, indicating that the C-terminal 100 amino acids of IKKgamma are important for negative regulation of NF-kappaB activation. In addition, the interaction of IKKbeta with IKKgamma was inhibited by co-transfection with a NIK expression plasmid. Our results suggest that overexpression of IKKgamma inhibits activation of NF-kappaB by NIK by competing with NIK for interaction with IKKbeta.