The candidate oncoprotein BCL-3 has been shown to function as a transcriptional co-activator for homodimers of NF-κB p50 and p50B. We expressed BCL-3 ectopically in pro-B cell lines and found that these cells exhibited a dramatic increase in nuclear κB motif binding activity of p50 homodimers containing BCL-3 in the complex. Co-transfection and in vitro reconstitution experiments revealed that the complex of p50 with its precursor p105 (p50–p105), which was shown to accumulate in the cytoplasm of the pro-B cell lines, is required for induction of DNA binding of p50 homodimers by BCL-3. However, we could see no in vivo or in vitro evidence of a BCL-3-induced increase in proteolytic processing. Instead, BCL-3-mediated reorganization of NFKB1 subunits was demonstrated in vitro. Immunofluorescence staining clearly demonstrated that the transition from cytoplasmic p50–p105 to nuclear p50 homodimers was induced by BCL-3 expression. Thus BCL-3 has versatile functions: cytoplasmic activation of p50 homodimers, their nuclear translocation and, as previously shown, modulation of the transcriptional machinery in the nucleus.