Activation of transcription factor NF-kappa B involves the signal-dependent degradation of basally phosphorylated inhibitors such as I kappa B alpha and I kappa B beta. The gene encoding I kappa B alpha is under NF-kappa B control, which provides a negative feedback loop to terminate the induced NF-kappa B response, However, recent studies have identified a hypophosphorylated pool of I kappa B beta that shields nuclear NF-kappa B from inhibition by newly synthesized I kappa B alpha. In the present work, we provide three lines of evidence indicating that this protection mechanism is regulated by the C-terminal PEST domain of I kappa B beta. First, disruption of two basal phosphoacceptors present in the I kappa B beta PEST domain (Ser-313 and Ser-315) yields a mutant that forms ternary complexes with NF-kappa B and its target DNA-binding site. Second, based on in vitro mixing experiments, these ternary complexes are resistant to the inhibitory action of I kappa B alpha. Third, mutants of I kappa B beta that are defective for phosphorylation at Ser-313 and Ser-315 fail to efficiently block NF-kappa B-directed transcription in vivo, whereas replacement of these two I kappa B beta residues with a phosphoserine mimetic generates a fully functional repressor, Taken together, our findings suggest that the functional fate of NF-kappa B when bound to I kappa B beta is critically dependent on the phosphorylation status of the I kappa B beta PEST domain.