The prototranscription factor p100 represents an intersection of the NF-kappaB and IkappaB families, potentially serving as both the precursor for the active NF-kappaB subunit p52 and as an IkappaB capable of retaining NF-kappaB in the cytoplasm. NF-kappaB-inducing kinase (NIK) controls processing of p100 to generate p52, and thus NIK-deficient mice can be used to examine the biological effects of a failure in such processing. We demonstrate that treatment of wild-type osteoclast precursors with the osteoclastogenic cytokine receptor activator of NF-kappaB ligand (RANKL) increases both expression of p100 and its conversion to p52, resulting in unchanged net levels of p100. In the absence of NIK, p100 expression is increased by RANKL, but its conversion to p52 is blocked, leading to cytosolic accumulation of p100, which, acting as an IkappaB protein, binds NF-kappaB complexes and prevents their nuclear translocation. High levels of unprocessed p100 in osteoclast precursors from NIK-/- mice or a nonprocessable form of the protein in wild-type cells impair RANKL-mediated osteoclastogenesis. Conversely, p100-deficient osteoclast precursors show enhanced sensitivity to RANKL. These data demonstrate a novel, biologically relevant means of regulating NF-kappaB signaling, with upstream control and kinetics distinct from the classical IkappaBalpha pathway.