Misregulation of REL, a nuclear factor-kappaB family transcription factor, has been implicated in several human lymphoid malignancies. REL has a conserved N-terminal DNA-binding/dimerization domain called the Rel homology domain (RHD) and a C-terminal transactivation domain (TAD). Here, we define the sequences (amino acids (aa) 323-422) between the RHD and TAD as a REL inhibitory domain (RID) because deletion of these sequences increases both REL transactivation and DNA binding. Furthermore, we have characterized two REL mRNA splice variants that encode proteins with alterations near RID: one lacking exon 9 sequences (aa 308-330; RELDelta9) and one with an exonized Alu fragment insertion of 32 aa after aa 307 (REL+Alu). Deletion of RID or exon 9-encoded sequences increases transactivation by GAL4-REL by approximately threefold. Moreover, deletion of RID or exon 9 sequences increases transactivation by full-length REL from certain kappaB site-containing promoters and increases DNA binding by REL. Deletion of RID does not affect REL's ability to transform chicken spleen cells. Reverse transcriptase-polymerase chain reaction analysis of mRNA from both primary lymphoma samples and several transformed tissue culture cell lines indicates that the RELDelta9 splice variant is preferentially expressed in lymphoma, suggesting that the REL transcript lacking exon 9 could serve as a marker for certain types of lymphoid tumors.