Rheumatoid arthritis (RA) causes a symmetric, inflammatory polyarthritis that results in joint destruction and significant disability. Signaling pathways that regulate the production of cytokines and destructive enzymes have been implicated in its pathogenesis and represent potential therapeutic targets. The IkappaB kinase (IKK)-related kinase, IKKepsilon/IKKi, which plays a pivotal role in regulating antiviral gene transcription, is constitutively expressed by cultured fibroblast-like synoviocytes (FLS) and could participate in the pathogenesis of RA. In the current studies we demonstrate that IKKepsilon protein is expressed in RA and osteoarthritis synovium and that the protein is found primarily in the synovial intimal lining. Functional studies in cultured FLS showed that IKKepsilon kinase activity is rapidly induced by cytokines, although IkappaB phosphorylation is significantly less compared with IKK2. Because NF-kappaB activation is similar in wild-type and IKKepsilon knockout murine FLS, studies were performed to identify an alternative substrate for IKKepsilon. Interestingly, c-Jun is a more efficient substrate for IKKepsilon immunocomplexes in human FLS and this activity appears to be independent of JNK. The functional relevance of IKKepsilon was examined using murine IKKepsilon(-/-) cultured FLS. IL-1-, TNF-alpha-, and LPS-mediated induction of matrix metalloproteinases, MMP3 and MMP13, is significantly decreased in the IKKepsilon(-/-) cells. These data suggest a novel role for the IKKepsilon complex in synovial inflammation, extracellular matrix destruction, and activation of the viral program and innate immune response in RA.