Dorsal-ventral patterning in the Drosophila embryo relies on a signal transduction pathway that is similar to a signaling pathway leading to the activation of the mammalian transcription factor NF-kappa B. Stimulation of this Drosophila pathway on the ventral side of the embryo causes the nuclear translocation of Dorsal, the Drosophila NF-kappa B homolog. Cactus, like its mammalian homolog I kappa B, inhibits nuclear translocation by binding Dorsal and retaining it in the cytoplasm. We show that Cactus, like I kappa B, is rapidly degraded in response to signaling. More importantly, signal-dependent degradation of Cactus does not require the presence of Dorsal, indicating that Cactus degradation is a direct response to signaling, and that disruption of the Dorsal/Cactus complex is a secondary result of Cactus degradation. Mutant alleles of cactus that encode more stable forms of the protein block signaling, showing that efficient degradation is necessary for signaling. We find that Cactus protein stability is regulated by two independent processes that rely on different regions within the protein: signal-dependent degradation requires sequences in the amino terminus or ankyrin repeats, whereas signal-independent degradation of free Cactus requires the carboxy-terminal region of the protein that includes a PEST sequence.