After exposure of cells to tumor necrosis factor (TNF), I kappa B alpha is rapidly degraded by a proteolytic activity that is required for nuclear localization and activation of transcription factor NF-kappa B. To investigate this problem, we have developed a cell-free system to study the degradation of I kappa B alpha initiated in vivo. In this in vitro system, characteristics of endogenous I kappa B alpha degradation were comparable to those observed in vivo. Recombinant I kappa B alpha, when added to lysates from cells exposed to TNF, was specifically degraded by a cellular proteolytic activity; however, it was stable in extracts from unstimulated cells. Inhibition characteristics of the proteolytic activity responsible for I kappa B alpha degradation suggest the involvement of a serine protease. Analysis of mutated forms of I kappa B alpha in the in vitro system demonstrated that an I kappa B alpha species which was unable to interact with NF-kappa B was still efficiently degraded. In contrast, deletion of the C-terminal 61 amino acids from I kappa B alpha rendered the protein resistant to proteolytic degradation. Expression of I kappa B alpha mutated forms in COS-7 cells confirmed the importance of the C-terminal domain for the degradation of the protein in vivo following cell activation. Thus, it is likely that the acidic, negatively charged region represented by the C-terminal 61 amino acids of the protein contains residues critical for TNF-inducible degradation of I kappa B alpha.