The biological activity of the transcription factor NF-kappa B is controlled mainly by the I kappa B alpha and I kappa B beta proteins, which restrict NF-kappa B to the cytoplasm and inhibit its DNA binding activity. Mere, we carried out experiments to determine and compare the mechanisms by which I kappa B alpha and I kappa B beta inhibit NF-kappa B-dependent transcriptional activation. First, we found that in vivo I kappa B alpha is a stronger inhibitor of NF-kappa B than is I kappa B beta. This difference is directly correlated with their abilities to inhibit NF-kappa B binding to DNA in vitro and in vivo. Moreover, I kappa B alpha, but not I kappa B beta, can remove NF-kappa B from functional preinitiation complexes in in vitro transcription experiments. Second, we showed that both I kappa Bs function in vivo not only in the cytoplasm but also in the nucleus, where they inhibit NF-kappa B binding to DNA. Third, the inhibitory activity of I kappa B beta, but not that of I kappa B alpha, is facilitated by phosphorylation of thee C-terminal PEST sequence by casein kinase II and/or by the interaction of NF-kappa B with high-mobility group protein I (HMG I) on selected promoters. The unphosphorylated form of I kappa B beta forms stable ternary complexes with NF-kappa B on the DNA either in vitro or in vivo. These experiments suggest that I kappa B alpha works as a postinduction repressor of NF-kappa B independently of HMG I, whereas I kappa B beta functions preferentially in promoters regulated by the NF-kappa B/HMG I complexes.