NF-κB/Rel factors have been implicated in the regulation of liver cell death during development, after partial hepatectomy, and in hepatocytes in culture. Rat liver epithelial cells (RLEs) display many biochemical and ultrastructural characteristics of oval cells, which are multipotent cells that can differentiate into mature hepatocytes. While untransformed RLEs undergo growth arrest and apoptosis in response to transforming growth factor β1 (TGF-β1) treatment, oncogenic Ras-or Raf-transformed RLEs are insensitive to TGF-β1-mediated growth arrest. Here we have tested the hypothesis that Ras-or Raf-transformed RLEs have altered NF-κB regulation, leading to this resistance to TGF-β1. We show that classical NF-κB is aberrantly activated in Ras-or Raf-transformed RLEs, due to increased phosphorylation and degradation of IκB-α protein. Inhibition of NF-κB activity with a dominant negative form of IκB-α restored TGF-β1-mediated cell killing of transformed RLEs. IKK activity mediates this hyperphosphorylation of IκB-α protein. As judged by kinase assays and transfection of dominant negative IKK-1 and IKK-2 expression vectors, NF-κB activation by Ras appeared to be mediated by both IKK-1 and IKK-2, while Raf-induced NF-κB activation was mediated by IKK-2. NF-κB activation in the Ras-transformed cells was mediated by both the Raf and phosphatidylinositol 3-kinase pathways, while in the Raf-transformed cells, NF-κB induction was mediated by the mitogen-activated protein kinase cascade. Last, inhibition of either IKK-1 or IKK-2 reduced focus-forming activity in Ras-transformed RLEs. Overall, these studies elucidate a mechanism that contributes to the process of transformation of liver cells by oncogene Ras and Raf through the IκB kinase complex leading to constitutive activation of NF-κB.