The ZAS proteins are large zinc-finger transcriptional proteins implicated in growth, signal transduction, and lymphoid development. Recombinant ZAS fusion proteins containing one of the two DNA-binding domains have been shown to bind specifically to the kappaB motif, but the endogenous ZAS proteins or their physiological functions are largely unknown. The kappaB motif, GGGACTTTCC, is a gene regulatory element found in promoters and enhancers of genes involved in immunity, inflammation, and growth. The Rel family of NF-kappaB, predominantly p65.p50 and p50.p50, are transcription factors well known for inducing gene expression by means of interaction with the kappaB motif during acute-phase responses. A functional link between ZAS and NF-kappaB, two distinct families of kappaB-binding proteins, stems from our previous in vitro studies that show that a representative member, ZAS3, associates with TRAF2, an adaptor molecule in tumor necrosis factor signaling, to inhibit NF-kappaB activation. Biochemical and genetic evidence presented herein shows that ZAS3 encodes major kappaB-binding proteins in B lymphocytes, and that NF-kappaB is constitutively activated in ZAS3-deficient B cells. The data suggest that ZAS3 plays crucial functions in maintaining cellular homeostasis, at least in part by inhibiting NF-kappaB by means of three mechanisms: inhibition of nuclear translocation of p65, competition for kappaB gene regulatory elements, and repression of target gene transcription.