Notch participates in diverse cell fate decisions throughout embryonic development and postnatal life. Members of the NF-kappaB/Rel family of transcription factors are involved in the regulation of a variety of genes important for immune function. The biological activity of the NF-kappaB transcription factors is controlled by IkappaB proteins. Our previous work demonstrated that an intracellular, constitutively active form of human Notch-1/translocation-associated Notch homologue-1 (Notch(IC)) functions as an IkappaB molecule with specificity for the NF-kappaB p50 subunit and physically interacts with NF-kappaB in T cells. In the current study, we investigated the roles of different domains of Notch(IC) in the regulation of NF-kappaB-directed gene expression and NF-kappaB DNA binding activity. We found that Notch(IC) localizes to the nucleus and that a region in the N-terminal portion of Notch(IC), not the six ankyrin repeats, is responsible for the inhibitory effects of Notch on NF-kappaB-directed gene expression and NF-kappaB DNA binding activity. The N-terminal portion of Notch(IC) inhibited p50 DNA binding and interacted specifically with p50 subunit, not p65 of NF-kappaB. The interaction between Notch and NF-kappaB indicates that in addition to its role in the development of the immune system, Notch-1 may also have critical functions in the immune response, inflammation, viral infection, and apoptosis through control of NF-kappaB-mediated gene expression.