It has been shown previously that the transcription factor NF-kappaB and its inhibitor IkappaBalpha shuttle constitutively between cytosol and nucleus. Moreover, we have recently demonstrated nucleocytoplasmic shuttling of the NF-kappaB-inducing kinase NIK, a component of the NF-kappaB pathway, which is essential for lymph node development and B-cell function. Here we show that nuclear NIK also occurs in nucleoli and that this localization is mediated by a stretch of basic amino acids in the N-terminal part of the protein (R(143)-K-K-R-K-K-K(149)). This motif is necessary and sufficient for nucleolar localization of NIK, as judged by nuclear localization of mutant versions of the full-length protein and the fact that coupling of these seven amino acids to GFP also leads to accumulation in nucleoli. Using fluorescence loss in photobleaching (FLIP) and fluorescence recovery after photobleaching (FRAP) approaches, we demonstrate a dynamic distribution between nucleoli and nucleoplasm and a high mobility of NIK in both compartments. Together with the nuclear export signal in the C-terminal portion of NIK that we have also characterized in detail, the nuclear/nucleolar targeting signals of NIK mediate dynamic circulation of the protein between the cytoplasmic, nucleoplasmic and nucleolar compartments. We demonstrate that nuclear NIK is capable of activating NF-kappaB and that this effect is diminished by nucleolar localization. Thus, subcellular distribution of NIK to different compartments might be a means of regulating the function of this kinase.