IkappaB alpha is an inhibitor of the transcriptional factor NF-kappaB, and it is an essential component of the signaling pathways that lead to expression of inflammatory molecules. These include cytokines and costimulatory molecules associated with antigen presentation in an inflammatory immune response. In this study, we report that antigen-presenting cells exposed to TGF-beta induce peripheral tolerance by increasing IkappaB alpha expression. Exposure of antigen presenting cells (APCs) to TGF-beta is known to impair their ability to secrete IL-12, and such impairment correlated with reduced NF-kappaB activity as indicated by significantly reduced nuclear levels of p50, an essential subunit of NF-kappaB for IL-12 transcription. Blockade of increased nuclear IkappaB alpha in APCs by expression of small interfering RNA molecules (siRNAs) targeting IkappaB alpha transcripts prevented IL-12 impairment and the decline in nuclear p50 levels. Furthermore, such IkappaB alpha blockade also interfered with the tolerogenic property of TGF-beta-exposed APCs. However, increased expression of IkappaB alpha in APCs, independent of TGF-beta exposure, reduced nuclear p50 levels and permitted tolerance induction by APCs. Thus, our findings attribute a direct and significant role to IkappaB alpha in the tolerogenic potential of APCs. Increased IkappaB alpha expression in APCs may therefore offer a therapeutic approach to achieve antigen-specific immunomodulation.