NF-kappaB corresponds to an inducible eukaryotic transcription factor complex that is negatively regulated in resting cells by its physical assembly with a family of cytoplasmic ankyrin-rich inhibitors termed IkappaB. Stimulation of cells with various proinflammatory cytokines, including tumor necrosis factor alpha (TNF-alpha), induces nuclear NF-kappaB expression. TNF-alpha signaling involves the recruitment of at least three proteins (TRADD, RIP, and TRAF2) to the type 1 TNF-alpha receptor tail, leading to the sequential activation of the downstream NF-kappaB-inducing kinase (NIK) and IkappaB-specific kinases (IKKalpha and IKKbeta). When activated, IKKalpha and IKKbeta directly phosphorylate the two N-terminal regulatory serines within IkappaB alpha, triggering ubiquitination and rapid degradation of this inhibitor in the 26S proteasome. This process liberates the NF-kappaB complex, allowing it to translocate to the nucleus. In studies of NIK, we found that Thr-559 located within the activation loop of its kinase domain regulates NIK action. Alanine substitution of Thr-559 but not other serine or threonine residues within the activation loop abolishes its activity and its ability to phosphorylate and activate IKKalpha. Such a NIK-T559A mutant also dominantly interferes with TNF-alpha induction of NF-kappaB. We also found that ectopically expressed NIK both spontaneously forms oligomers and displays a high level of constitutive activity. Analysis of a series of NIK deletion mutants indicates that multiple subregions of the kinase participate in the formation of these NIK-NIK oligomers. NIK also physically assembles with downstream IKKalpha; however, this interaction is mediated through a discrete C-terminal domain within NIK located between amino acids 735 and 947. When expressed alone, this C-terminal NIK fragment functions as a potent inhibitor of TNF-alpha-mediated induction of NF-kappaB and alone is sufficient to disrupt the physical association of NIK and IKKalpha. Together, these findings provide new insights into the molecular basis for TNF-alpha signaling, suggesting an important role for heterotypic and possibly homotypic interactions of NIK in this response.