Complex signaling pathways regulate the innate immune system of insects, with NF-kappaB transcription factors playing a central role in the activation of antimicrobial peptides and other immune genes. Although numerous studies have characterized the immune responses of insects to pathogens, comparatively little is known about the counter-strategies pathogens have evolved to circumvent host defenses. Among the most potent immunosuppressive pathogens of insects are polydnaviruses that are symbiotically associated with parasitoid wasps. Here, we report that the Microplitis demolitor bracovirus encodes a family of genes with homology to inhibitor kappaB (IkappaB) proteins from insects and mammals. Functional analysis of two of these genes, H4 and N5, were conducted in Drosophila S2 cells. Recombinant H4 and N5 greatly reduced the expression of drosomycin and attacin reporter constructs, which are under NF-kappaB regulation through the Toll and Imd pathways. Coimmunoprecipitation experiments indicated that H4 and N5 bound to the Rel proteins Dif and Relish, and N5 also weakly bound to Dorsal. H4 and N5 also inhibited binding of Dif and Relish to kappaB sites in the promoters of the drosomycin and cecropin A1 genes. Collectively, these results indicate that H4 and N5 function as IkappaBs and, circumstantially, suggest that other IkappaB-like gene family members are involved in the suppression of the insect immune system.