A novel member of the I kappaB family has been identified as a protein that associated with the p50 subunit of NF-kappaB in a yeast two-hybrid screen. Similar to previously known I kappaB proteins, this member, I kappaB epsilon, has six consecutive ankyrin repeats. I kappaB epsilon mRNA is widely expressed in different human tissues, with highest levels in spleen, testis, and lung. I kappaB epsilon interacts with different NF-kappaB proteins, including p65 (RelA), c-Rel, p50, and p52, in vitro and in vivo and inhibits the DNA-binding activity of both p50-p65 and p50-c-Rel complexes effectively. Endogenous and transfected NF-kappaB (RelA-dependent) transcriptional activation is inhibited by I kappaB epsilon. I kappaB epsilon mRNA is expressed at different levels in specific cell types and is synthesized constitutively in transformed B-cell lines. It also displays differential induction in response to tumor necrosis factor alpha, interleukin-1, or phorbol ester stimulation compared to I kappaB alpha in non-B-cell lines. Therefore, I kappaB epsilon represents a novel I kappaB family member which provides an alternative mechanism for regulation of NF-kappaB-dependent transcription.