The NF-κB precursor p105 has dual functions: cytoplasmic retention of attached NF-κB proteins and generation of p50 by processing. It is poorly understood whether these activities of p105 are responsive to signalling processes that are known to activate NF-κB p50–p65. We propose a model that p105 is inducibly degraded, and that its degradation liberates sequestered NF-κB subunits, including its processing product p50. p50 homodimers are specifically bound by the transcription activator Bcl-3. We show that TNFα, IL-1β or phorbolester (PMA) trigger rapid formation of Bcl-3–p50 complexes with the same kinetics as activation of p50–p65 complexes. TNF-α-induced Bcl-3–p50 formation requires proteasome activity, but is independent of p50–p65 released from IκBα, indicating a pathway that involves p105 proteolysis. The IκB kinases IKKα and IKKβ physically interact with p105 and inducibly phosphorylate three C-terminal serines. p105 is degraded upon TNF-α stimulation, but only when the IKK phospho-acceptor sites are intact. Furthermore, a p105 mutant, lacking the IKK phosphorylation sites, acts as a super-repressor of IKK-induced NF-κB transcriptional activity. Thus, the known NF-κB stimuli not only cause nuclear accumulation of p50–p65 heterodimers but also of Bcl-3–p50 and perhaps further transcription activator complexes which are formed upon IKK-mediated p105 degradation.