We have cloned a cDNA corresponding to a novel gene from a human epithelial cell line by subtractive hybridization and polymerase chain reaction techniques. This gene is expressed at the message level and at the protein level in a lung alveolar type II-like epithelial cell line but not in lung fibroblasts. In adult human tissues, the mRNA for this gene was detected only in the heart and the skeletal muscle, but not in the brain, placenta, whole lung, liver, or kidney. We have named this gene I kappa BR (for I kappa B-related) since its 52-kDa protein product has significant homology to the I kappa B family of proteins which function as inhibitory cytoplasmic retention proteins for the vertebrate rel/NF-kappa B transcription factors. Although the important role of NF-kappa B in gene activation in cells of the immune system is now well established, a similar role in other cell types or in vertebrate development is less clear. The deduced amino acid sequence of I kappa BR has the most significant homology to the Drosophila protein Cactus which inhibits the function of the NF-kappa B-like protein Dorsal. In electrophoretic mobility shift experiments, I kappa BR inhibited the ability of the p50:p65 NF-kappa B heterodimer to bind DNA. The DNA binding ability of the p50 homodimer but not the p65 homodimer was drastically inhibited by I kappa BR. In transfection experiments, overexpression of I kappa BR significantly inhibited NF-kappa B-dependent transcription from the Ig kappa enhancer. This new member of the I kappa B family of proteins, I kappa BR, may play an important role in regulation of NF-kappa B function in epithelial cells.