The NF-kappa b/Rel and I kappa B proteins are important regulators of lymphocyte activation and gene expression. We have identified a rearrangement of the NFKB-2 gene in the HUT 78 human cutaneous T-cell leukemia (CTCL) line, cDNA and genomic DNA sequence predicted the presence of a truncated 80 kD NFKB-2 precursor protein (p80HT), instead of the normal p100 protein. No wild-type allele was identified. Elevated levels of two aberrantly sized RNAs were detected, and high levels of p80HT and processed p52 protein were present in HUT 78 cell nuclei. The p52 protein bound to a palindromic kappa B DNA motif, however p80HT did not. Rearrangement of the NFKB-2 gene was also detected in DNA from two patients with CTCL. Rearrangement and overexpression of the NFKB-2 gene may contribute to the genesis of a subset of T-cell malignancies.