Nuclear factor-kappaB (NF-kappaB) transcription factors regulate B-cell development and survival. However, whether they also have a role during early steps of B-cell differentiation is largely unclear. Here, we show that constitutive activation of the alternative NF-kappaB pathway in p100(-/-) knockin mice resulted in a block of early B-cell development at the transition from the pre-pro-B to the pro-B-cell stage due to enhanced RelB activity. Expression of the essential B-cell transcription factors EBF and in particular Pax5 was reduced in p100(-/-) B-cell precursors in a RelB-dependent manner, resulting in reduced mRNA levels of B lineage-specific genes. Moreover, enhanced RelB function in p100(-/-) B-cell precursors was accompanied by increased expression of B lineage-inappropriate genes, such as C/EBP alpha, correlating with a markedly increased myeloid differentiation potential of p100(-/-) progenitor B cells. Ectopic expression of Pax5 in hematopoietic progenitors restored early B-cell development in p100(-/-) bone marrow, suggesting that impaired early B lymphopoiesis in mice lacking the p100 inhibitor may be due to down-regulation of Pax5 expression. Thus, tightly controlled p100 processing and RelB activation is essential for normal B lymphopoiesis and lymphoid/myeloid lineage decision in bone marrow.