The transcription factor NF-kappa B is retained in the cytoplasm by its interaction with the inhibitory subunit known as I kappa B, Signal-induced serine phosphorylation and subsequent ubiquitination of I kappa B alpha target it for degradation by the 26 S proteasome, Recently, pervanadate, a protein-tyrosine phosphatase inhibitor, was shown to block the degradation of I kappa B alpha, thus inhibiting NF-kappa B activation, We investigated the mechanism by which pervanadate inhibits the degradation of I kappa B alpha, Western blot analysis of I kappa B alpha from tumor necrosis factor-treated cells revealed a slower migrating I kappa B alpha species that was subsequently degraded, However, pervanadate-treated cells also revealed a slower migrating species of I kappa B alpha that appeared in a time- and dose dependent manner and was not degraded by tumor necrosis factor, The slower migrating species of I kappa B alpha from pervanadate-treated cells was tyrosine-phosphorylated as revealed by cross-reactivity with anti-phosphotyrosine antibodies, by the ability of the specific tyrosine phosphatase PTP1B to dephosphorylate it, and by phosphoamino acid analysis of I kappa B alpha immunoprecipitated from P-32-labeled cells. By site-specific mutagenesis and deletion analysis, we identified Tyr-42 on I kappa B alpha as the phosphoacceptor site, Furthermore, in an in vitro reconstitution system, tyrosine-phosphorylated I kappa B alpha was protected from degradation, Our results demonstrate that inducible phosphorylation and degradation of I kappa B alpha are negatively regulated by phosphorylation at Tyr-42, thus preventing NF-kappa B activation.