Tumor necrosis factor (TNF)-related apoptosis-inducing ligand (TRAIL) is cytotoxic to a wide variety of transformed cells, but not to most normal cells, implying potential therapeutic value against advanced cancer. However, signal transduction in TRAIL-mediated apoptosis is not clearly understood compared with other TNF family members. Specifically, it is not yet understood how TRAIL controls nuclear factor kappaB (NF-kappaB) activation and overcomes its anti-apoptotic effect. We explored the regulation of NF-kappaB activity by TRAIL and its role in apoptosis. TRAIL combined with IkappaBalpha-"superrepressor" induced potent apoptosis of SK-Hep1 hepatoma cells at low concentrations of TRAIL that do not independently induce apoptosis. Apoptosis by high concentrations of TRAIL was not affected by IkappaBalpha-superrepressor. Although TRAIL alone did not induce NF-kappaB activity, TRAIL combined with z-VAD significantly increased NF-kappaB activation. Analysis of the NF-kappaB activation pathway indicated that TRAIL unexpectedly induced cleavage of p65 at Asp97, which was blocked by z-VAD, accounting for all of these findings. p65 expression abrogated apoptosis and increased NF-kappaB activity in TRAIL-treated cells. Cleavage-resistant p65D97A further increased NF-kappaB activity in TRAIL-treated cells, whereas the COOH-terminal p65 fragment acted as a dominant-negative inhibitor. XIAP levels were increased by TRAIL in combination with z-VAD, whereas XIAP levels were decreased by TRAIL alone. Cleavage of p65 was also detected after FRO thyroid cancer cells were treated with TRAIL. These results suggest that TRAIL induces NF-kappaB activation, but simultaneously abrogates NF-kappaB activation by cleaving p65, and thereby inhibits the induction of anti-apoptotic proteins such as XIAP, which contributes to the strong apoptotic activity of TRAIL compared with other TNF family members.