Transcription complex components frequently show coupled folding and binding but the functional significance of this mode of molecular recognition is unclear. IkappaBalpha binds to and inhibits the transcriptional activity of NF-kappaB via its ankyrin repeat (AR) domain. The beta-hairpins in ARs 5-6 in IkappaBalpha are weakly-folded in the free protein, and their folding is coupled to NF-kappaB binding. Here, we show that introduction of two stabilizing mutations in IkappaBalpha AR 6 causes ARs 5-6 to fold cooperatively to a conformation similar to that in NF-kappaB-bound IkappaBalpha. Free IkappaBalpha is degraded by a proteasome-dependent but ubiquitin-independent mechanism, and this process is slower for the pre-folded mutants both in vitro and in cells. Interestingly, the pre-folded mutants bind NF-kappaB more weakly, as shown by both surface plasmon resonance and isothermal titration calorimetry in vitro and immunoprecipitation experiments from cells. One consequence of the weaker binding is that resting cells containing these mutants show incomplete inhibition of NF-kappaB activation; they have significant amounts of nuclear NF-kappaB. Additionally, the weaker binding combined with the slower rate of degradation of the free protein results in reduced levels of nuclear NF-kappaB upon stimulation. These data demonstrate clearly that the coupled folding and binding of IkappaBalpha is critical for its precise control of NF-kappaB transcriptional activity.