Addition of mitogenic growth factors to quiescent cells triggers complex signal transduction cascades that result in the reprogramming of gene expression and entry into the cell cycle. We have found that an oncogenic variant of the c-Raf-1 protein kinase stimulated the expression of promoters containing NF-kappa B binding sites. In situ immunofluorescence analysis revealed elevated nuclear levels of the p65 subunit of NF-kappa B in v-raf-transformed NIH 3T3 cells. Incubation of HeLa cell cytoplasmic extracts with a purified recombinant glutathione S-transferase-raf fusion protein in the presence of ATP released active NF-kappa B that could be detected by electrophoretic gel mobility shift assay. Coincubation of purified recombinant I kappa B and glutathione S-transferase-raf in the presence of ATP resulted in the phosphorylation of I kappa B. Coexpression of GAL4 (activation domain)-I kappa B and GAL4 (DNA-binding domain)-raf fusion proteins in yeast resulted in stimulation of a GAL4-responsive reporter gene, indicating that I kappa B and Raf interact physically in vivo. These results indicate that the Raf-1 kinase functions in signal transduction in part by activating the NF-kappa B transcription factor by phosphorylating I kappa B in the cytoplasmic I kappa B-NF-kappa B complex to release active NF-kappa B.