In unstimulated cells the transcription factor NF–κB is held in the cytoplasm in an inactive state by IκB inhibitor proteins. Ultimately activation of NF–κB is achieved by ubiquitination and proteasome–mediated degradation of IκBα and we have therefore investigated factors which control this proteolysis. Signal–induced degradation of IκBα exposes the nuclear localization signal of NF–κB, thus allowing it to translocate into the nucleus and activate transcription from responsive genes. An autoregulatory loop is established when NF–κB induces expression of the IκBα gene and newly synthesized IκBα accumulates in the nucleus where it negatively regulates NF–κB–dependent transcription. As part of this post–induction repression, the nuclear export signal on IκBα mediates transport of NF–κB–IκBα complexes from the nucleus to the cytoplasm. As nuclear export of IκBα is blocked by leptomycin B this drug was used to examine the effect of cellular location on susceptibility of IκBα to signal–induced degradation. In the presence of leptomycin B, IκBα is accumulated in the nucleus and in this compartment is resistant to signal–induced degradation. Thus signal–induced degradation of IκBα is mainly, if not exclusively a cytoplasmic process. An efficient nuclear export of IκBα is therefore essential for maintaining a low level of IκBα in the nucleus and allowing NF–κB to be transcriptionally active upon cell stimulation. We have detected a modified form of IκBα, conjugated to the small ubiquitin–like protein SUMO–1, which is resistant to signal–induced degradation. SUMO–1 modified IκBα remains associated with NF–κB and thus overexpression of SUMO–1 inhibits the signal–induced activation of NF–κB–dependent transcription. Reconstitution of the conjugation reaction with highly purified proteins demonstrated that in the presence of a novel E1 SUMO–1 activating enzyme, Ubch9 directly conjugated SUMO–1 to IκBα on residues K21 and K22, which are also used for ubiquitin modification. Thus, while ubiquitination targets proteins for rapid degradation, SUMO–1 modification acts antagonistically to generate proteins resistant to degradation.