Caffeic acid phenethyl ester (CAPE), an active component of propolis from honeybee hives, is known to have antimitogenic, anticarcinogenic, antiinflammatory, and immunomodulatory properties. The molecular basis for these diverse properties is not known. Since the role of the nuclear factor NF-kappa B in these responses has been documented, we examined the effect of CAPE on this transcription factor. Our results show that the activation of NF-kappa B by tumor necrosis factor (TNF) is completely blocked by CAPE in a dose- and time-dependent manner. Besides TNF, CAPE also inhibited NF-kappa B activation induced by other inflammatory agents including phorbol ester, ceramide, hydrogen peroxide, and okadaic acid. Since the reducing agents reversed the inhibitory effect of CAPE, it suggests the role of critical sulfhydryl groups in NF-kappa B activation. CAPE prevented the translocation of the p65 subunit of NF-kappa B to the nucleus and had no significant effect on TNF-induced I kappa B alpha degradation, but did delay I kappa B alpha resynthesis. The effect of CAPE on inhibition of NF-kappa B binding to the DNA was specific, in as much as binding of other transcription factors including AP-1, Oct-1, and TFIID to their DNA were not affected. When various synthetic structural analogues of CAPE were examined, it was found that a bicyclic, rotationally constrained, 5,6-dihydroxy form was superactive, whereas 6,7-dihydroxy variant was least active. Thus, overall our results demonstrate that CAPE is a potent and a specific inhibitor of NF-kappa B activation and this may provide the molecular basis for its multiple immunomodulatory and antiinflammatory activities.