Chromosomal translocations between loci encoding MALT1 and c-IAP2 are common in MALT lymphomas. The resulting fusion proteins lack the c-IAP2 RING domain, the region responsible for its ubiquitin protein ligase (E3) activity. Ectopic expression of the fusion protein activates the canonical NF-κB signaling cascade, but how it does so is controversial and how it promotes MALT lymphoma is unknown. Considering recent reports implicating c-IAP1 and c-IAP2 E3 activity in repression of non-canonical NF-κB signaling, we asked if the c-IAP2/MALT fusion protein can initiate non-canonical NF-κB activation. Here we show that in addition to canonical activation, the fusion protein stabilizes NIK and activates non-canonical NF-κB. Canonical but not non-canonical activation depended on MALT1 paracaspase activity, and expression of E3-inactive c-IAP2 activated non-canonical NF-κB. Mice in which endogenous c-IAP2 was replaced with an E3-inactive mutant accumulated abnormal B cells with elevated non-canonical NF-κB and had increased numbers of B cells with a marginal zone phenotype, gut-associated lymphoid hyperplasia, and other features of MALT lymphoma. Thus, the c-IAP2/MALT1 fusion protein activates NF-κB by two distinct mechanisms, and loss of c-IAP2 E3 activity in vivo is sufficient to induce abnormalities common to MALT lymphoma.