Processing of the NF-kappa B2 precursor p100 to the mature p52 subunit is regulated via a unique pathway. NF-kappa B-inducing kinase (NIK) induces I kappa B kinase alpha (IKK alpha)-mediated phosphorylation of specific serine residues in the C-terminal domain of p100, leading to recruitment of the SCF(beta-TrCP) ubiquitin ligase. We identified a single lysine residue, K855, that serves as the ubiquitin-anchoring residue required for signal-induced processing of p100. In a reconstituted system containing purified components, p100-K855R could not be ubiquitinated. In a crude extract and cells, only residual, signal-independent ubiquitination and processing were retained. Importantly, K855 is located in a site homologous to K22 that serves as an ubiquitination site in I kappa B alpha. This suggests a common recognition mechanism for the two molecules. In contrast, p105, the p100 homologue, lacks a similar Lys residue. We also demonstrate that the NEDD8 pathway is essential for the SCF(beta-TrCP) activity. In a reconstituted system, efficient ubiquitination of p100 required all three components of the pathway - E1, the UBC12 E2 and NEDD8. Experiments in reconstituted systems and in cells demonstrated that SCF(beta-TrCP), which contains a mutant Cul-1 that cannot be NEDDylated, cannot stimulate ubiquitination and processing. Similarly, dominant negative UBC12 inhibits, in a reversible manner, both ubiquitination and processing of p100.